Plymouth people most likely to not pay their debts

People in Plymouth are the most unlikely to be able to pay their debts, according to the latest figures.

Plymouth's Moor View parliamentary constituency has been given the unwanted title of the nation's insolvency capital.

The statistics collected by the Government showed there were 382 insolvencies declared in the Moor View area of the city in 2017, which is one for every 191 adults living there.

That is the highest figure across the whole of England and Wales and more than twice the national average of one in 467 adults.

It means Plymouth has twice the national average of insolvent people – that’s individuals so deep in the red they can’t pay what they owe.

The Moor View area includes Whitleigh, Crownhill, Eggbuckland, Ham, Honicknowle, St Budeaux, Southway, North Prospect, Ernesetlle, Tamerton Foliot, Manadon, and Barne Barton.

The number of individual insolvencies in Plymouth Moor View rose from 348 in 2016 to 382 last year.

The figure rose as high as 431 in 2010 - shortly after the economic crash - but then dropped to 295 by 2015. Since then it has been rising year-on-year.

Plymouth, Sutton and Devonport is not far behind and has one insolvency for every 256 adults living in the area, or a total of 256, which is over the national average.

Torbay also has one insolvency for every 256 adults living in the area, with a total of 317.

Various reasons are being given for the hike in problem debts, including low interest rates, payday loans and new ways of financing cars, all of which have encouraged borrowing.

Individual insolvency is a way of dealing with personal debts which have become impossible to manage through usual economies.

They take three main forms. One is bankruptcy, where the person’s remaining assets are transferred to a trustee and redistributed to
creditors.

Bankruptcy generally lasts for a year but it remains on credit files for six years, making it harder to get future loans and other financial services.

Another option is an Individual Voluntary Arrangement (IVA)- a formally binding deal to pay back debts over a period of time.

Repayment plans, which typically last five years, are drawn up with an insolvency practitioner and then put to the creditors. If the payments do not cover the debts in full, the remainder is written off.

Not everyone can get an IVA, however, and not all types of debt are covered.

A third option are Debt Relief Orders (DROs), which are only available to people who owe less than £20,000.

The orders essentially freeze debts for a year, at the end of which they are written off.

The orders can cover credit card debt, loans, hire purchase deals and business debts. They do not cover court fines, student loans or child support payments.

Anything bought with a loan or credit agreement that forms part of a DRO has to be handed back, and once again it stays on a person’s
credit file for six years.

Across England and Wales there were 98,915 individual insolvencies in 2017, up from 89,876 the previous year.

Sheffield Hallam had the lowest rate, with just 57 insolvencies - or one for every 1,316 adults.

The figures only apply to individuals and do not include businesses that became insolvent during the year.

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