In Focus Collections
Recent research from ourselves and ComRes found that one in five British adults (20%) would find it ‘somewhat difficult’, ‘very difficult’, or ‘impossible’ to immediately pay an unexpected bill for an amount as little as £20, without assistance from an external source
While unemployment is low, the nature
of employment is much-changed. Working hours can be unpredictable and not necessarily well paid. That said, low unemployment may help explain rising IVA numbers: employment helps give people a platform for the regular debt repayments involved in the procedure. Inflation was above the Bank of England’s target rate for most of 2018, and, although
March 2019
wage growth overtook inflation, there was still a considerable amount of lost ground to make up. For many people, it would have been a
case of too little, too late. Spending levels were maintained through
debt or by using savings, but this is obviously unsustainable in anything other than the short term. Savings levels are painfully thin, exposing
people to financial upsets. As an illustration of this, recent research
from ourselves and ComRes found that one in five British adults (20%) would find it ‘somewhat difficult’, ‘very difficult’, or ‘impossible’ to immediately pay an unexpected bill for an amount as little as £20, without assistance from an external source.
Types of insolvency It is always important to look at the numbers for different types of insolvency procedures, as individual voluntary arrangements (IVA), DROs, and bankruptcy numbers each tell us different things. In reality, IVAs are often used to deal with consumer debts, but IVA
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numbers can also be sensitive to changes in the debt-advice market, and can rise and fall independently of overall personal indebtedness. DROs and bankruptcy are perhaps
better indicators of the state of the nation’s personal finances, so increases here are concerning. DROs are used by people with low assets and low debts, and show us the number of people for whom even small-value debts are completely unaffordable. Bankruptcy is linked to job loss or
insolvencies among small and medium-sized businesses and sole traders. There are measures being taken by the
government to help people in financial distress. The breathing space for people in debt is due to be introduced in the next few years, and will give indebted people a 60- day period free from creditor action to seek qualified advice as to the best way for them to resolve their situation. We have campaigned for the breathing
space for many years and we are very pleased to see that it is nearing its launch. CCR
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