THE decision by the UK’s biggest payday lender to enter administration, coupled with a sharp rise in the number of personal insolvencies, has again thrust the state of people’s finances under the media spotlight.
Hitting the insolvency headlines within days of each other, the stories have also triggered the question of just how big a factor in a person’s financial struggles is access to so-called easy money.
And with an increasingly cashless society, insolvency experts are pointing to the problems this can generate for budgeting responsibly and monitoring spending accurately.
Official figures have revealed that the number of people becoming financially insolvent has risen by nearly a quarter, following a surge in individual voluntary arrangements (IVAs).
And experts are particularly concerned that young people are battling insolvency at an ever-increasing rate. As many as 1 in 12 people taking out an IVA are under 25.
And that’s a big worry for many communities across Yorkshire and the North East with the fastest-growing youth populations – especially Bradford in West Yorkshire, officially the “youngest” city in the UK.
An IVA is an agreement entered into by a debtor with his/her creditors to pay off their debts over a set period of time. It is one option a debtor can use to pay off their debts. It is a formal, legal debt solution.
Once approved, and filed at court both the debtor and his/her creditors must adhere to the terms of the IVA.
It is an alternative to bankruptcy for a debtor who is in financial difficulty. The main benefit of an IVA is its flexibility and the fact that (unlike bankruptcy) it allows the debtor to retain control of his/her assets.
According to number-crunching by the Insolvency Service, personal insolvencies across England and Wales rose by 23 per cent year-on-year to 30,879 in the third quarter.
This included some 19,973 IVAs between July and September. This was up 43 per cent compared with a year earlier.
But the number of people going bankrupt – a more far-reaching outcome than an IVA – eased back, down 2.6 per cent quarter-on-quarter to 4,122.
Meanwhile, the UK’s payday lending industry appears to be struggling after QuickQuid collapsed into administration following thousands of complaints from customers.
Along with other payday lenders, the firm has faced accusations that it preys on people in financial difficulties by granting them small loans at sky-high interest rates.
It is thought to have been facing as many as 10,000 complaints, many of them from borrowers given loans they could not afford to repay.
QuickQuid’s demise follows the collapse into insolvency of rivals Wonga and The Money Shop.
While these two stories arguably provide a worrying window into the state of personal finances across Yorkshire, the North East and nationwide, they also underline how important it is for anyone concerned about their financial situation to get advice sooner rather than later.
Expert and professional help can make the world of difference to someone’s finances – and can often help them make a considered decision rather than a knee-jerk one.
Here at Walsh Taylor, when financial difficulties arise, we’ll put time on your side.
For more information on how our licensed insolvency practitioners and business recovery teams in Leeds, Bradford, Harrogate and Darlington can help you, please call us on 03300 244 660 or email firstname.lastname@example.org