From the period of April to the end of June, the number of insolvencies being processed in the UK hit a six-year high. It is clear that the various stresses being placed upon low-paid workers, such as high inflation, meagre wage rises, and benefit cuts have affected the wages of low-paid Britons throughout the nation.
During the second quarter of this year, the number of individual insolvencies throughout the UK hit a whopping 28,951, which is a 4.4% increase on the previous quarter, and an incredible 27.3% on the same quarter from 2017.
Why Are Insolvencies Rising?
The reasons for this are broad and varied. For a start, wage growth is barely keeping ahead of inflation. This means that people are seeing a real squeeze on their incomes and are struggling to make it last the month.
In addition, while there are more people are in ‘employment’, thousands of people are stuck in the ‘gig economy’. The gig economy has been described as “a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs”.
Jobs that we typically associate with the gig economy are things like Uber driving, being a courier, or a food delivery driver for companies like Deliveroo. These jobs often result in unpredictable and sporadic wages which can not only be low but incredibly challenging to budget with.
What makes things worse is that the Bank of England is on the cusp of announcing a rise in interest rates. This will make life significantly harder for the people in society with the least money, who already rely on credit to make their lives more manageable and comfortable.
A Rise in IVAs
The Insolvency Service, a government body which is intended to “deliver economic confidence by supporting those in financial distress”, has noted how the severe upswing in IVA applications has helped to create this insolvency figure.
In the report, they explained there were just under 18,000 IVAs in the last quarter, which was a 5.7% increase upon the first quarter of this year. They also pointed out that this was the highest number of IVAs since their introduction in 1987.
While it is true that going insolvent is not a ‘good’ thing. Facing unmanageable debt in the first place is a stressful process which can follow you everywhere. However, it is also true that seeking out help and signing up for a formal debt solution is far superior to continuing to try and keep your head above water while making no progress on your situation.
The economy should not be in a state where there are around 18,000 IVA applications accepted in three months, but at the same time, this is significantly better than having 18,000 people doing nothing about their increasing debt trouble.
At debt free life, we naturally hate to see people come to us in desperate financial situations. It is a stress that no one should ever go through, and we fully appreciate the mental toll that it can take on a person.
However, at the same time, we are happy that people who are in such difficult situations are taking steps to improve their situation. Reaching out for help is never easy, and due to the social stigma that has been placed on debt, financial troubles are even more difficult to talk about. Nonetheless, opening up about your issues is significantly easier than continuing to struggle alone.
Get Help with Debt
As it stands, the economy is bleak and doesn’t seem to be improving. Thousands of Britons around the country are finding that their wages are getting them less and less, while others are being forced into the gig economy where they cannot rely on a regular salary. We don’t have the power to stop this, unfortunately, but we do have the ability to help those facing financial difficulty.
Insolvency isn’t good, but with the right service and support it really is not the end of the world. In fact, in many cases, it can be an effective way of hitting the reset button to get on top of debt which you would otherwise have no hope of paying.
Our advisers are on-hand to come up with a plan which will not only make your payments simpler and cheaper but will allow you to write off as much as 80% of your debt entirely. Our team is committed to offering all the support you need from start to finish and explaining everything you need to know in an easy-to-understand manner.
In order to speak with our team immediately, give us a call on 0800 808 5124.
Alternatively, take a moment to fill in our debt calculator, and one of our staff will be in touch as soon as possible.