Record numbers declared insolvent

Posted in 'Dealing with Debt' by Richard Catlin

08 February 2010

More than 134,000 people were declared insolvent in 2009 – a 26% increase on the previous year and the highest figure since records began almost 50 years ago.

The figure includes people being declared bankrupt, entering into an Individual Voluntary Arrangement (IVA) or taking out a Debt Relief Order (DRO) in England and Wales. The Insolvency Service also showed that the number of insolvencies in Scotland increased year-on-year by 18%.

At the same time, it has been claimed that the Government’s attempt to provide more free debt advice is struggling to cope with demand from consumers in financial difficulty – something that has been vigorously denied by charities involved in providing help.

The Department for Business, Innovation and Skills set out to increase the amount of free face-to-face debt advice available to consumers back in 2006, even before the recession officially began. The programme committed £130 million to debt charities to try and improve the amount and quality of available help.

Claims made last week by MPs, that consumers in financial difficulty were facing long delays in seeing an advisor, have been denied. Requests for help were up 28% in the first six months of the year, a figure that closely matches the increase in the number of people forced to resort to insolvency.

MP Richard Bacon, a member of the Public Accounts Committee, has criticised the programme for its lack of organisation and high costs – suggesting that as many as 1 in 4 people who have received face to face advice have admitted that they would have preferred to get advice online.

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