Insolvency figures show increase in IVAs and DROs

However, both Debt Relief Orders and Individual Voluntary Arrangements showing increases of 16.3% and 8.1%, respectively.

Overall there were 49,932 new IVAs in the last tax year, slightly up on the last tax year where the figure totalled 49,729. DEMSA member Atlantic Financial Management is recommending that those households in serious financial difficulty do not to ignore their debt problems and that they should consider all debt solutions available to make an ‘informed choice’.

Kevin Still, Director of Atlantic Financial Management, comments:

“With the UK now in a ‘double dip’ recession, rents rising, interest rates on mortgages increasing and the cost of living continuing to climb, debts that were manageable in the past are likely to become more daunting and could easily spiral out of control.

"It is crucial that those in debt seek help before their situation worsens and don’t become complacent where statistics outwardly indicate that the trend in personal insolvency is reducing.

“Individuals and families in debt often feel stigmatised because they feel that others assume that they overspend. However, our experience in the last 5 years is that most serious debt problems are due to a change in circumstances, such as the loss of income, expenditure shocks and changes within the household set-up.

"This seriously squeezes disposable income and can create vulnerability where UK consumers consequently don’t make an ‘informed choice’ in the debt solution that is most applicable to their circumstances.

“As a member of DEMSA, whose code of conduct is approved by the Office of Fair Trading, Atlantic is committed to offering all-round debt advice to determine the most appropriate debt solution and, where appropriate, to sign-post consumers to the right debt solution provider.

Kevin Still continues:

“In some instances an IVA or DRO could well be the best option,”

“A Debt Management Plan can often be a less formal managed debt solution, where a client has ruled out self-management.

"A DMP can be a very effective way forward as an affordable schedule of repayments can be negotiated with all creditors ensuring the mortgage or rent, energy and fuel cost, critical insurance premiums and council tax bills get paid before non-priority debts. This ensures the debt is paid off at a rate that the client can afford and is very adaptable to future changes in circumstances.

“We do not know how the economy will fare in the next few months and years, but if current trends continue many families will struggle to manage financially unless they take action. Paying off or at least efficiently managing any existing debts will help significantly, as will shopping around and comparing insurance, banking, utility and mortgage providers to reduce monthly outgoings as much as possible. 

"Now is not the time for financial complacency.  It is crucial that the increasing numbers of people facing debt worries look at ways to improve their situation before they are forced to consider serious steps such as bankruptcy.”