Rising debts blamed on wage stagnation and benefits cuts

The number of UK personal insolvencies hit 115,299 in 2018 - an increase of 16 per cent on the previous year, according to insolvency practitioner R3.

North West R3 chair man Paul Barber said the rise was driven by an increase in individual voluntary arrangements – a scheme to avoid bankruptcies – as banks tightened credit rules.

Anthony Brookes, business development and collections manager at the Fylde Coast’s credit union CLEVR Money, said: “It is sad but unsurprising that personal insolvencies are on the up.

“For some people, the lack of wage increases, cuts to benefits, increased cost of living all make it difficult just to keep up with the basics.

“With no way to start saving, they are left vulnerable when something goes wrong or we hit an expensive time. Many turn to quick credit which can, itself, make the problem worse.

“With the banks further tightening their lending restrictions, payday loans can seem like the only solution. But their sky-high interest rates can leave people owing even more. “IVAs are one of the routes out which people are taking. Unfortunately, they are not the magic solution and can make life harder in the future.

“We exist to help prevent people in this area from getting to that point. Our ethical loans have a fair rate of interest and we work hard to get people out of a spiral of debt and sort out their finances properly.

At this time of year much of our work involves consolidating and paying off multiple loans with just one credit union loan, giving people the breathing space and support they need to avoid reaching the IVA stage."