Following a recent release of the 2018 Insolvency Service statistics, Richard Haymes, Head of Financial Difficulties at TDX Group, an Equifax company, believes widespread confusion over the consequences of personal insolvency mean more education is required.
Figures released from the Insolvency Service today show that personal insolvencies reached their highest levels since 2011, with Individual Voluntary Arrangements (IVAs) at the highest annual level recorded. We expect insolvencies to remain at this high rate throughout 2019 and 2020, fuelled by high consumer lending and the forceful marketing of companies offering personal insolvency as a debt management solution.
Research we’ve conducted reveals major misperceptions around the consequences of personal insolvency. Nearly three in ten people don’t realise that entering personal insolvency could affect their access to rental accommodation, over a quarter (26%) of people don’t know it may affect their eligibility for a bank account, and nearly one in five (19%) Brits think it wouldn’t influence their ability to access a mortgage.
The survey also shows people don’t realise the impact on their access to other everyday services, for example three in five (60%) Brits believe there would be no issues in accessing utility services such as electricity, gas, or TV and broadband services.
There’s wholesale confusion concerning the consequences of personal insolvency. Entering into an IVA is recorded on your credit report for six years and can make it hard for you to be approved for rental agreements, a mortgage or bank account, as well as other services like utilities. It’s never a decision to be taken lightly.
While an IVA serves a valuable purpose when someone’s financial situation has spiralled out of control, we urge anyone experiencing financial pressure to seek help from their creditors or free independent money advice at an early stage so alternative solutions can be explored. The government consultation on increased breathing space and Statutory Debt Repayment Plan (SDRP) closes today, and is designed to provide more support for consumers. The more we publically debate debt and ways to manage it, the better the outcomes will be for individuals, businesses and the economy as a whole.