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Hampshire: Fall in individual insolvencies may mask problem, warns R3

By Dan Teuton
16 July 2013

An insolvency expert has warned that while the number of personal insolvencies has fallen in Hampshire, it does not necessarily mean that residents’ personal finances are getting better. 

According to figures published today by the Insolvency Service, the rate of individual insolvencies per 10,000 of adult population has fallen from 24.5 to 20.3% in Hampshire from 2011 to 2012.

In addition, the rate of personal bankruptcy in the county has dropped from 8.6% to 5.5%.

James Stares, chairman of the southern committee of R3, the trade body for the insolvency profession, says the fall shown in the Insolvency Service statistics may mask a very real problem.

“Our research shows debt worries remain high, and it is very likely that there are a significant number of people using informal debt repayment arrangements or Debt Management Plans, which are not covered by the Insolvency Service’s statistics. There needs to be a central register that keeps track of Debt Management Plans so that we can find out the true state of personal insolvency in the UK.”

R3’s latest Personal Debt Snapshot, an R3/ComRes survey (report due to be published this month) found that 48& of British adults in the South East were concerned about their current level of debt. 9% of those worried about their debts are worried about paying a Debt Management Plan.

Stares added: “Our concern is that the current rules on personal insolvency often make it difficult for people to use a formal insolvency process that is appropriate for their situation.”

“Frequently, insolvent individuals cannot afford the fees to enter bankruptcy, but they have too much debt or assets to qualify for alternatives like Debt Relief Orders. This leaves the debtor caught in the middle, exposed to their creditors. Action needs to be taken by the Government to reduce the number of people in this situation.”

“Individual Voluntary Arrangements offer an alternative solution. They do not have the same fee barrier as bankruptcy but they do have to be agreed by creditors, which can be easier said than done.”

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