Don’t wait until an IVA is the only answer
Personal insolvencies reach seven-year high according to recent figures from the government’s Insolvency Service.
The number of personal insolvencies reached 115,299 in 2018 – an increase of 16% on the previous year and the highest annual total since 2011. This was driven by an increase in individual voluntary arrangements (IVAs) which reached 71,034 – their highest annual total on record.
According to R3, the trade body for insolvency practitioners, personal insolvency numbers had been rising steadily every year since 2015. North West R3 chair Paul Barber, who is also a partner at Begbies Traynor, said: “As banks and other lenders have tightened their credit standards in response to the Bank of England’s concerns around consumer over-indebtedness, many people have run out of road.”
All across the country credit unions are working hard to help help people before they reach that point.
Anthony Brookes, business development and collections manager at CLEVR Money, the credit union for people living in Blackpool Fylde, Wyre and Preston, said: “It is sad but unsurprising that personal insolvencies are on the up. For some people, the lack of wage increases, cuts to benefits, increased cost of living etc makes it difficult just to keep up with the basics. With no way to start saving, they are left vulnerable when something goes wrong or we hit an expensive time of the year, like Christmas. Many turn to quick credit which can, itself, make the problem worse.
“With the banks further tightening their lending restrictions, payday loans can seem like the only solution. But their sky-high interest rates can leave people owning even more, sometimes across several different loans. Things get out of control, repayments stop, bailiffs letters start arriving, and IVAs are one of the routes out which people are taking. Unfortunately, they are not the magic solution and an IVA can make life harder in the future.
“We exist to help prevent people in this area from getting to that point. Our ethical loans have a fair rate of interest and we work hard to get people out of a spiral of debt and sort out their finances properly. At this time of year much of our work involves consolidating and paying off multiple loans with just one credit union loan, giving people the breathing space and support they need to avoid reaching the IVA stage.”
To find out more about our consolidation loans click here, or to make an appointment to speak directly with someone to sort out your finances, call 01253 478827