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For immediate release: Thursday,
1st February, 2007
1 IN 5 INDEBTED BRITS CONSIDERING INSOLVENCY
- But UK Debt Crisis Shows Early Signs of Improvement -
(London, 01/02/07) 1 in 5 Brits are considering insolvency, but the total number struggling with debt is beginning to fall. That’s according to the latest quarterly research published today by leading debt consultancy, Thomas Charles (www.thomascharles.com).
According to research conducted in January 2007 in conjunction with YouGov, almost 1 in 5 (19%) adults with debts of £10k or more now report some likelihood of becoming bankrupt or taking out an Individual Voluntary Arrangement. This is an increase of around 12% since October 2006 (17%) and a return to the figures seen back in April 2006. Men have now overtaken women as the gender closest to insolvency with 1 in 5 (20%) now expressing some likelihood of insolvency, compared with 17% of women.
8.4 million, or 1 in 5, adults in the UK have unsecured debts of at least £10k. According to the latest figures, the number of women in over £10k or more of debt has reached its highest figure since the quarterly research began in April 2006; now standing at 18%, an increase of 6% since October (17%). However, while men remain the more indebted at 20%, there are signs of improvement with the number of UK men in over £10k or more of debt falling 9% since October 2006 (22%).
Positive signs of recovery are evident in the number of people indicating that they regularly experience problems repaying their debts. Overall, numbers have fallen by almost a quarter from 30% in October 2006 to 23% in January 2007.
While encouraging, the dramatic drop comes mainly from those experiencing problems ‘every’ month, down from 15% to 9%, a drop of 40%. However, the number experiencing problems ‘quite frequently’ and ‘most months’ have remained virtually static since the previous quarter and the number reporting more occasional problems has increased by around 11% from 28% in October 2006 to 31% in January 2007.
The improvement here is most evident in the male population, where the number experiencing problems every month is down 60% from 15% in October 2006 to 6% in January 2007, the lowest figure since research began (8%). The figures for women are positive, but less dramatic where the number experiencing problems every month has fallen by a quarter from 16% in October 2006 to 12% in January 2007.
James Falla, Director of Thomas Charles, commented:
“The increase in the number of likely insolvencies is linked in part to the pressures of the festive season, where we typically see two phenomena: people spending beyond their means, and those already in trouble putting off action until the New Year.
This festive effect is likely to be evident in the DTI insolvency stats, due out on 2nd Feb, which cover the last quarter of 2006. While the number of insolvencies will probably show an increase year on year, they will likely be similar to, or even lower than, the previous quarter.
Our research suggests we will see a significant peak in insolvencies in the first quarter of 2007 as people deal with festive debt, followed by a gradual reduction in insolvency levels throughout the rest of the year.
While the slight decrease in the number of people regularly struggling with debt is encouraging, many are still walking a fine line. If interest rates continue to rise, we could see those on the edge being penalised, ultimately pushing up insolvency figures and prolonging the debt crisis in the UK.”
Consumers wishing to contact Thomas Charles for advice on debt can do so via the company’s website (www.thomascharles.com) or by phone on 0800 072 5988.
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