A new report is showing the number of people finding debt relief through insolvency has dropped. The Insolvency Service released data in their quarterly report showing that in England and Wales those officially declaring themselves insolvent have dropped 3.7%. These figures include those that have declared themselves bankrupt as well as those who have started a Debt Relief Order (DRO) or Individual Voluntary Agreement (IVA).
The drop of 3.7% is a drop from the same quarter last year, when compared to last quarter there is also a drop of 2.5%. While the drop would appear to be a sign that things may be getting better for households it is believed that the figure is misleading. Those that are trying to handle their debt through an informal Debt Management Plan (DMP) to handle their debt. The number of people working with a DMP could amount to hundreds of thousands of people in just one year.
Analysts estimate that there are probably 3-4 households or individuals starting a DMP for every person declaring insolvency. Since there are no official records available concerning DMPs the numbers can only be estimated and therefore the truth is that there are probably more not less that are finding themselves in very bad trouble when it comes to paying back debt.
Debt charities are reporting that they are very busy and expect to continue to be so with the rising VAT in January. The increase in VAT may push those struggling or already on the edge over into insolvency or a DMP.