Thursday 28th of October 2010
The demand for individual voluntary arrangement (IVA) answers could be set to grow after it was suggested the UK is facing an "insolvency epidemic".
According to research carried out by RSM Tenon, the highest rates of people going bust are in the areas where a large proportion of individuals work in the public sector.
And following the government's Comprehensive Spending Review, the company stated the situation could be set to worsen for a large number of adults around the country.
That's because the coalition's austerity measures - announced by chancellor George Osbourne on October 20th - are expected to result in 490,000 job cuts in the division.
Currently, the north-west experiences the highest growth in personal insolvencies, suffering a 20 per cent year-on-year increase. This figure could now "skyrocket", as 20.8 per cent of workers in the region are employed in the public sector.
In addition, the north-east and east Midlands, which have both seen a 17 per cent annual rise in the number of people going broke, are likely to suffer further as a result of the spending plans.
Answers on IVAs could, therefore, become an important source of information for cash-strapped Brits in the near future.
The measure is only available to those in full-time employment and who owe more than £15,000 on credit cards and personal loans.
But the series of reduced-rate monthly repayments might offer considerable breathing space to those concerned at what the future holds.
Commenting on the figures, Mark Sands, head of bankruptcy at RSM Tenon, said: "There is no doubt in my mind that these spending cuts will serve as a catalyst for further personal insolvency rises. Thousands of people are on the brink of bankruptcy, struggling to manage the debts they have built up over a number of years.
"The new wave of job losses will remove the last barrier towards the insolvency process for many living in the north, deepening the north-south divide."
By Chris King
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