Women who are 65+ in coastal towns face the greatest debt challenges, insolvency statistics show. Scottish Trust Deed compares the data for England and Wales with Scotland.
Individual Voluntary Arrangements (IVAs) are a route out of debt for anyone who meets the IVA qualifying criteria. But as the latest government report into insolvencies by age and gender shows, some people in certain parts of the UK are far more likely to need them than others.
What do we mean by insolvency?
Insolvency simply means your outgoings exceed your income in an unmanageable way. A person becomes part of the insolvency statistics when their insolvency is registered, either because they have been declared bankrupt, have taken an IVA or are subject to a DRO (Debt Relief Order).
In England and Wales, there’s a clear regional split between the areas with the most and least insolvencies. All ten of the places with the lowest insolvency rates are in London and the South East.
In contrast, six of the 10 areas with the highest insolvency rates are on the coast. From Scarborough to Torbay, Plymouth to Blackpool, the data shows people in these areas are almost twice as likely to be insolvent than the national average, and four times as likely to be insolvent compared with the best-performing areas.
Some of these areas don’t, perhaps, come as a surprise. Blackpool is frequently top (or bottom, depending on how you look at it) of many a social mobility, poverty or employment table. But many other coastal resorts – even more affluent destinations such as Torbay – are experiencing the same debt issues.
Why do more IVAs occur on the coast?
The popularity of overseas holidays, the collapse of traditional industries and seasonal work have all been blamed for the problems faced in coastal areas, but a far simpler explanation is that the coast attracts those whose life didn’t go the way they planned, and who have happy associations with the area.
In 2017, Dr Arif Rajpura, Blackpool’s director of public health, told the FT: “People have a positive association from their childhood . . . When something’s not gone right in their lives, [when] there’s a problem, [when] they’re running away from something, then people do tend to come to Blackpool.”
As the FT reports, coastal towns have become net exporters of good health and skilled labour and net importers of “ill health, unemployment and precarious labour” – all of which can be a direct route into IVAs and other forms of insolvency.
Women more likely to be insolvent than men
Traditionally, men were far more likely than women to be insolvent. In 2008, as the Guardian reported, the male insolvency rate was 56% higher than for women. Today women apply for 14% more insolvencies than men. In the latest figures, insolvencies were running at 26.6 per 10,000 adult women against 23.3 for adult men – and the gender gap is widening.
That’s not to say that women haven’t always been dealing with debt, but the routes out of debt that were suitable for men didn’t suit women. As the FT notes, the prime driver for insolvency in men is business failure. For women it is relationship breakdown. Bankruptcy worked for men. It was far less appropriate for the circumstances of women.
The rise of IVAs and DROs has given more women a viable route out of debt, and many more are choosing to take it.
Over-65s most likely to face insolvency
If women now account for more IVAs and other insolvency routes than men, the picture is even more stark if you’re over 65. Insolvencies by women rose in every age group between 2008 and 2018, but in those aged 65+ the increase was a staggering 88%.
Why are older people, and older women in particular, facing the greatest insolvency issues?
Stuart Lewis, founder of Rest Less told the Guardian that older people were, “…more likely to be made redundant, to be in long-term unemployment and to face age discrimination in the recruitment process.” He went on to point the finger at “the wide gulf in private pension savings between men and women” and added that, “women in their 50s and 60s are also more likely to have taken time out of the workplace and to have caring responsibilities, whether for elder relatives, partners or grandchildren.”
The debt picture in Scotland
Insolvency in Scotland is handled by the Accountant in Bankruptcy. There are no figures which break down insolvency by gender or coastal authority in Scotland, but latest figures do show that overall averages are higher than for the rest of the UK. Personal insolvencies (that is, sequestrations (bankruptcies) and protected trust deeds) stood at 28.3 per 10,000 adults.
Can I get an IVA in Scotland?
No, but you can apply for a Scottish trust deed. These are often called ‘Scottish IVAs’ although trust deeds are not IVAs and there are numerous differences between the two.
Are IVA’s a government backed scheme?
IVA’s were introduced in 1986 and form part of the Insolvency Act (1986) to help people who are struggling to pay their debts. Unlike debt management, they are a legislated and formal debt solution meaning that the IVA agreement is legally binding, which can help to eliminate harassment from creditors.
Will I lose my home in an IVA?
Unlike bankruptcy, you wouldn’t usually lose your home in an IVA. If you own your home and have equity you may be required to release it so the IVA company can pay your creditors (that is, the people and organisations to whom you owe money). Read more here.
Will an IVA affect my credit rating?
Your credit rating will be affected whilst on an IVA and will stay on your credit file for up to 6 years. Any debt solution will affect your credit rating, but at the same time if you’ve missed payments and defaulted then your credit file will be affected anyway, as a default also stays on your file for up to 6 years. Read more here.
Do I need to know who I owe before I apply for an IVA?
It’s not a problem if you cannot remember all the people you owe money to before you apply for an IVA. A lot of people forget as they may have been taken out a long time ago. We have systems which can find all your debtors.
How much debt can I write off with an IVA?
The amount of debt that can be written off with an IVA very much depends on personal circumstances, such as your current employment status, debt level and disposable income. The maximum is 90% of unsecured debt but the average is around 60%.
How can I apply for an IVA?
There are 4 ways to apply for an IVA. 1: Call us on 0800 193 1024. 2: Apply online here. 3: Chat with us on live chat. 4: Apply through our Facebook page. The IVA application process is very simple and can be setup in as little as 24 hours. The speed usually depends on how quickly you can get information to us.
I’m thinking about an IVA. But what happens if I have no money spare at the end of the month?
It’s still worth exploring options with a debt management professional. They may be able to help you make your budget stretch further. If not, they will be able to give you advice about which is the right debt solution tool for you. That could be an IVA (in England, Wales or NI) or a protected trust deed (in Scotland) but there are several other potential options.
What happens if my circumstances change?
Talk to your IVA insolvency practitioner. They may be able to get agreement from creditors to a temporary reduction in payments or a longer repayment period to help you over a difficult period.
Why is my bank taking money from my account to pay my debts?
Banks hold an automatic ‘right to offset’. This means that if you have money in a bank account and unpaid loans or credit cards with the same lender, they can take the money in the account to pay off the debts. More confusingly, this can also happen when the debt is owed to a company also owned by your bank.
So, for example, if your bank account is with HSBC and you have an unpaid credit card with M&S Bank or First Direct, a right to offset could be used to pay those debts, because HSBC owns all of them.
You can find more about which banks are subsidiaries of other banks here.
In an IVA, and to avoid the right to offset, you may be required to switch bank accounts.
Will an IVA affect my credit rating?
Yes. The record of the IVA will remain on your credit file for six years from the date the IVA begins.
Will I still be able to get credit with an IVA?
Getting credit is harder with an IVA. If you want more than £500 of credit you’ll need permission from your insolvency practitioner in most circumstances. The chances of credit being approved are less, and any credit you are able to secure is likely to cost more.
Bear in mind, however, that an IVA (and a Scottish trust deed) is designed to help you escape debt, not find new sources of it.
If I choose an IVA, do I have to deal with my creditors directly?
No. In fact, you can’t set up an IVA without an insolvency practitioner who will handle all the to-ing and fro-ing between creditors. Assuming you qualify in other ways (see above) that makes an IVA ideal if you’d rather not speak to your creditors.
It’s not easy to face debt, but you’re not alone. As the data shows, if you’re a woman, if you’re over 65, if you live on the coast or in Scotland, you are statistically far more likely to be in unmanageable debt. But help is available. To access it, talk to us.
- Apply For An IVA
- Is An IVA Worth It?
- Are IVAs a Government Scheme?
- What If I Can’t Pay My IVA?
- Can I Get An IVA If I’m Self Employed?
- Rebuilding My Credit Rating After An IVA
- IVAs: What Will I Need To Show My Insolvency Practitioner?
- Who’s Most Likely to Need an IVA?
- How Much Does An IVA Cost?
- Can I Afford An IVA?
- IVAs – Can I Lose My Home?
- IVA And Trust Deeds | Whats The Difference?
- How Will My IVA Affect My Parents?
- An IVA Mythbuster
- Can An IVA Be Rejected?
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