More Individuals Going Bust in England: How can I reduce personal debt?February 9, 2017
New statistics published by the Insolvency Service showed that more individuals are going bust across in England. Over 90,000 people declared bankruptcy last year, an increase of 13%.
The number of personal insolvencies in Scotland and the annual change are below.
This personal insolvency landscape in Scottish has been steadily improving since the Financial Crisis. Recently, we have enjoyed four consecutive years of sustained improvement in the number of people entering personal insolvency.
The 2015-16 financial year saw the fewest number of insolvencies for a decade with just 8,413 people going bust.
Rising household debt and personal insolvency
The new Insolvency Service figures come hot on the heels of news that household debt has reached its highest level since the Financial Crisis with the British public loading up credit cards and taking out large personal loans.
Increasing household debt and historically low interest rates have led Bank of England bosses to issue a warning to the public over borrowing habits, advising we remain vigilant of taking on more than we can handle.
The worry goes that individuals, fuelled by cheap borrowing rates, will take on too much debt. If interest rates increase from their historic low, what is affordable now could become seriously unaffordable overnight.
Some financial commentators are claiming that this is already happening, suggesting that this year marks the turning point and predicting that personal insolvencies will continue to rise throughout 2017.
Ultimately, whether the increase is a long-term trend or temporary blip remains to be seen. In the meantime, however, we will be there to support individuals who are struggling with debt right now.
How can I reduce personal debt?
If you are struggling with debt, don’t let stories like this scare you. There are a number of ways to get your finances back on track.
In the sections below, we’ll discuss a number of options open to you when you find yourself struggling with debt.
Slow and Steady Reduction
Analyse your monthly income and expenditure, removing any extra luxuries you could cut. Anything you have left over and above your necessary expenses is your disposable monthly income. Use this money to pay off your debts.
However, sometimes your disposable income isn’t enough and you will be unable to make steady and significant payments towards your debts. If that’s the case, you may need to consider another option.
A trust deed is a voluntary, yet legally binding agreement between you and your unsecured creditors. The agreement says you will make affordable monthly payments towards your debt over a set period. At the end of that period, any remaining debt is cleared as long as you have complied with the terms of the agreement.
Debt Arrangement Scheme
A debt arrangement scheme is a statutory scheme run by the Scottish Government to help debtors to pay their debts by giving them more time to pay without hassle or threat of court action from their creditors. A debt arrangement scheme will usually freeze interest, fees and charges on your debts from the date the application is made.
Sequestration (often called bankruptcy) is the second form of personal insolvency in Scotland. In return for agreeing to pay a monthly contribution from your income for a set period of time and pay in or realise the value in your assets, your creditors will agree to write off your debts.