Northern and Scottish towns lead insolvencies recovery

Nottingham, UK, 20 April 2016 – The UK’s rate of personal insolvencies dropped by 18% as towns in the North and Scotland showed the greatest improvement in 2015, according to Experian.

The average number of personal insolvencies in every 10,000 households across the country fell to 28 last year, down from 24 in 2014.

Skegness was the most improved area in the UK, as personal insolvencies fell to 37 in every 10,000 households, down 38% from 60 in 2014. Skipton, Doncaster and Blyth were among the other areas in the North of England to make significant progress over the course of the year.

Scotland had four of the top eight improving areas. Personal insolvencies fell to 11 in every 10,000 households last year in Dumfries, down from 31 in 2014, making it the most improved Scottish area. Glenrothes, Clydebank and Glasgow – Parkhead also recorded notably better figures year-on-year.

Experian’s Andy Wills said: “It’s encouraging to see an improving picture for personal insolvencies, particularly in the North of England and Scotland.  However, there are still areas that are struggling and the potential for levels of bad debt to rise among those most vulnerable is high.

“The majority of people struggling with debt want to somehow regain control of their finances. However, it can be a very stressful and emotional time, and the embarrassment of speaking to someone about their debts can be a barrier to taking those first steps to recovery. This is why it is important for credit providers to understand the best way to communicate with affected customers, as well as understand what, if anything, they can afford to repay.”

At the other end of the scale, Hempstead Valley experienced an 18% increase in the past year, rising from 22 to 26 in every 10,000 households over the same period.

Commenting on the reasons behind the fall in personal insolvencies in Skegness, Experian’s Dr Paul Russell said: “The improvement seen in Skegness is most likely to have been driven by the falling unemployment rates in the East Lindsey area, which the town falls into. Unemployment had previously been stubbornly high, but fell significantly in the last 18 months.

“Added to this is workforce job growth which has been good.  It’s worth noting, however, that many of the jobs created in East Lindsey last year were filled by people commuting into the area. Nonetheless, it’s had a positive impact and we expect workforce job growth to continue in 2016.  We expect more jobs created this year will go to people living locally.”

Families with children living in low-cost homes and elderly people who mostly live alone made the greatest progress, according to analysis from Experian’s Mosaic people classification system. The ‘Family Basics’ group recorded 66 insolvencies in every 10,000 households last year, down from 77 in 2014, while the ‘Vintage Value’ group improved to 34 from 42 in every 10,000 households. No Mosaic group suffered an increase in personal insolvencies when comparing the two full years.

Finishing 2015 strongly

Looking at the fourth quarter of last year – October to December – the UK’s personal debt situation continued to be more positive than the same period in 2014. The national Q4 average decreased from 8 in every 10,000 households filing for insolvency in 2014, to 7 in every 10,000 households in 2015. Dumfries in Scotland housed the biggest recovery, with rates falling from 8 in every 10,000 households in Q4 2014 to just 1 in every 10,000 households.

Road to recovery

Here are some steps from Experian that people can take to help them regain control of their finances and get back on track after a period of financial stress:

1. Consider your options: Bankruptcy is a special legal status which will see some debts written off, but this is not the only option available. Informal agreements called Debt Management Plans (DMPs) or more formal agreements like Debt Relief Orders (DROs) or Individual Voluntary Agreements (IVAs) may be more suitable for those in financial difficulty, so take the time to understand the differences between each. Formal debt solutions can and do vary in different parts of the UK.

2. Seek advice: Organisations such as Citizens Advice, National Debtline and StepChange Debt Charity have experts who can provide you with guidance and help you find a solution that suits your situation. It is important to remember there is always support if you need it.

3. Check your credit report: Once you’ve figured out which option to take, check your credit reports with the three main credit reference agencies to ensure the information is correct and reflects your current circumstances. If you find something on your credit report that you don’t agree with, query it with the lender in question or contact the credit reference agency who can query it on your behalf. People receiving help from a debt advice charity are able to get a free Experian credit report.

4. Rebuild a positive credit history: While lenders may view a past insolvency negatively, there are products with low limits and high interest rates available for people with poor credit ratings. Using a credit card for small purchases such as groceries, and paying what you owe each month will help show lenders you’re making progress and can be trusted to pay back what you owe.

5. Manage your credit responsibly: As you start to get back on track, making all repayments in full and on time each month will show that you are managing your finances, and your credit rating should improve over time. So be patient and take it step by step.

6. Choose wisely: As your credit rating begins to improve, don’t be tempted to make a flurry of applications. This could make it appear that you’re losing control and make lenders think you’re living outside your means. Try to make no more than one application for credit every three months and use price-comparison sites to research and target deals you’re likely to qualify for.

Elsewhere, Blackburn recorded the biggest deterioration, with an increase from 8 in every 10,000 households to 12 in every 10,000 households from Q4 2014 to Q4 2015. Torquay also continued to struggle, recording both the highest insolvency rating in Q4 2015, at 16 in every 10,000 households, as well as the highest rating in the whole of 2015, with 62 in every 10,000 households.

Top 25 biggest improvers from 2014 to 2015

Top 25 towns by highest insolvency rate

-ENDS-

Contact:

Ade O’Connor

PR Manager, Credit Services
0115 992 2645 / 07583 085 796
ade.o’connor@experian.com

About Experian

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