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Personal insolvency numbers soar

Personal insolvency numbers soar

Category: Debt

Updated: 04/02/2011
First Published: 04/02/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Last year saw the highest number of people declared insolvent in England and Wales since records began in 1960.

Figures from the Insolvency Service showed that some 135,089 people were declared insolvent last year, a rise of 0.7% from 2009.

While the number has only nudged up from the year before, a comparison between insolvencies from last year and just five years' previously better illustrates the scale of the problem.

The number of in insolvencies 2010 was double the number reported in 2005.

This is despite a year-on-year fall in insolvencies in the last three months of 2010.

There were 30,729 insolvencies in the final quarter of the year, a decrease of 13.6% on the same period a year previously.

The figures come against a backdrop of an ongoing effort by the Office of Fair Trading (OFT) to clean up the debt advice market.

Thirty-five firms have been shut down by the OFT in recent weeks, but the Consumer Credit Counselling Service (CCCS) has warned against the remaining firms charging already indebted people for advice they could get for free.

"Fee-charging debt management companies must not be allowed to plug the gap left by the reduction in public funding for debt advice," said Delroy Corinaldi, external affairs director at the CCCS.

"It would compound the situation if overindebted households believed they had no alternative but to pay for debt advice.

"The recent OFT report shows that the fee-charging debt management sector is not fit for purpose.

"It is vital that the OFT steps up its vigilance of the marketing practices of the fee-charging sector to ensure they do not trap people into using their services in the belief that there is no alternative."

Debt advice specialists such as the CCCS and Debt Free Direct will offer free and impartial advice to those with debt problems.

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