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South West debt crisis as more than 50 a day become insolvent

By Western Morning News  |  Posted: August 04, 2012

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The Westcountry continues to be a "horror story" of debt as more than 50 adults became insolvent each working day across the region in the last 12 months.

The South West has seen more than 13,000 insolvencies in the last 12 months. It works out as a ratio of 31 per 10,000 adults – far higher than the national ratio of 26.

According to the figures from accountancy and advisory firm RSM Tenon, the South West represented 12% of all personal insolvencies in the second quarter of 2012. It was up 2% on the previous quarter but a 3% decrease on the same quarter in 2011.

The news comes as official figures yesterday showed personal insolvencies have fallen to a four-year low, despite the toughening economy.

Steve Meakin, money advice co-ordinator for the Citizens Advice Bureau in Devon and Cornwall, emphasised that insolvency could mean anything from bankruptcy to voluntary arrangements where creditors will be paid part of what they are owed. He said the figures for the Westcountry had actually dropped significantly over the past three years, because personal credit was harder to obtain. But he said the region still remains at the top of the pile in terms of the "dreadfully high" proportion of people who are dealing with debt problems.

"The South West has two elements that really put stress and strain on people," he said. "It's the combination of relatively high housing prices, and high levels of part-time or seasonal work which tends to be low paid."

He singled out Torbay as repeatedly registering high on lists of debt-ridden areas because of the economic reliance on tourism. Plymouth and Cornwall always come close behind, he said. "When you look at the South West as a whole, it's pretty much a horror story."

But he said debtors were now faced with new pressures, including the temptation of "pay day lenders" which offer relatively small sums at high interest rates, designed to be paid back over short periods.

"The explosion of this type of lending has been absolutely astronomical," Mr Meakin said. "The problem is that you can be tempted by something in a shop window, tap into an app on your smart phone and 20 minutes later the money is in your bank. It's that quick."

He said low-income households were also feeling more strain in terms of living standards. Between 2009-10 and 2013-14, the average income is expected to drop by more than 7 per cent. Historically over the same period, incomes would have been expected to rise by 22%. We expect to get better off over time, but in fact we're just being squeezed," he said. "It means it's harder for people to service existing debts."

In the last year, the charity Consumer Credit Counselling Service has named Cornwall as the number one county for insolvencies, with Devon at number three and Dorset and Somerset both in the top ten nationally.

Spokesman Una Sarrall urged anyone who is having problems to seek help early. She said danger signs included using credit cards for living expenses or to pay other debts, but she said: "Even if you are worried, make a phone call. The best-case scenario is that you don't have a problem, but if you do, it's best to tackle it before the debt collectors come knocking."

Meanwhile, the Insolvency Service yesterday revealed that, despite the toughening economy, personal insolvencies have fallen to a four-year low.

Official figures show bankruptcies are at their lowest since 2003, with 8,088 bankruptcy orders made in the second quarter of this year, representing a 27% drop on a year ago, the Insolvency Service report showed.

The service said that bankruptcy numbers have been affected by the introduction of debt relief orders (DROs), which have risen to reach a similar level to bankruptcies for the first time.

DROs, which were introduced in 2009 and are often dubbed "bankruptcy light", reached a new high in the second quarter of this year at 7,956, an increase of almost 10% on a year ago.

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  • Karen362  |  August 10 2012, 3:06PM

    No Smarty, I just worked hard and went without everything for 4 years to get it. It just seems churlish not to mention it, particularly when I was always been told I had to have at least a 2.1 to get a job in a shop in London! So blame employers, not me... I'd happily keep stum about it if I thought I'd get a salary at the end of the day. But I don't want to clean any more toilets, I've already done my share of that, thanks... hope that doesn't seem too haughty, by the way...

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  • SmartyC  |  August 10 2012, 1:57PM

    If I had a care home I wouldn't employ someone with a degree in social policy either. I'd employ a someone suited to the task that was likely to stick around, not someone who felt they were slumming it and probably thought they were better than I and knew more about the job than I did. That may or may not apply to you Karen, I've no idea (although from your posts I can guess), but surely you can see the logic? Out of interest, if you feel your degree makes you "marginalised", why even mention it, especially when applying for a job in which it has no relevance? Or do you have an innate need to let everyone know about it?

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  • Karen362  |  August 08 2012, 7:50PM

    Ok, ok, I'm having a bad day.... I didn't say non-graduates were half-wits, before you start. I was merely suggesting that graduates have a hard time getting a job down here, that's all. I rang up a woman who ran a care home last week and the minute I mentioned I had a degree in social policy, she said "no" under her breath to dissuade me from collecting an application form. So now you know, folks - graduates are the new black, it's official! Someone has to defend us as a marginalised minority, after all. I know lots of very clever people without qualifications, BTW, and I don't look down on them - quite the opposite, in fact...

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  • omnivore23  |  August 08 2012, 6:48PM

    I agree Karen, you are being obtuse However, you might want to check a dictionary before using words like "obtuse", especially given your sense of moral and intellectual superiority over "non graduate half-wits" as you call them.

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  • Karen362  |  August 08 2012, 6:12PM

    I dunno, isn't that what the man from The Halifax says? Aspirational consumerism has increasingly evolved into a form of police entrapment... not sure it helps the local economy much, though, since any added value tends to get cancelled out by an incremental rise in local magistrates costs and adult social care spending - that's what I woz getting at, Storks. Sorry to be obtuse, folks.... I'm still recovering from my brief stint as a mystery shopper. the kind of gig it's best to avoid, BTW, unless you actually enjoy being screwed over by large corporations, that is ...

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  • Nevman  |  August 08 2012, 12:55PM

    If you're talking about PFI borrowing off the balance sheet, Taxman100, let's be even more honest and add that the Tories introduced it, and the Tories are continuing it.

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  • Taxman100  |  August 08 2012, 12:43PM

    Lets be honest for once; the last Labour government spent money they said they had, but didn't; (a bit of a Ponzi Scheme) and encouraged others to behave likewise. I still recall Gordon Brown, when Chancellor, being called, "Prudence". If his fiscal/financial actions were 'prudent', then we will have to enter the newly derived definition in our dictionaries!

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  • The_Real_SKoM  |  August 08 2012, 11:53AM

    Tut Tut Charles If much of this is good advice and assistance I'd hate to see the comments of a critic. I personally have a very small mortgage remaining, significant saving/investments and pay my credit card in full every month - all because I have always lived within my means and have been gainfully employed (including working for myself and having multiple jobs) almost my entire working life - mainly because I am multiskilled and adaptable. I have also not had any major disasters. Not everyone is as fortunate in the last respect and sometimes debt is no-one's fault. Ed Balls is a new kid on the block in this, I thought you had a longer memory than that

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  • hstmtu4000  |  August 08 2012, 10:14AM

    I have already said this elsewhere on this site but I will say it again.Decades of irresponsible borrowing and lending by individuals,financial institutions and countries have lead us to where we are now as the bill finally became due following the 2008 global financial meltdown leaving us as individuals and a country to pay for the mammoth economic bailout costs for a long time to come. The real question is how did it come to be that we found ourselves with two stark painful choices one of which was to wade in and commit Trillions of dollars/Pounds to save the financial system where we still end up loosing millions of jobs,people loose their homes and trillions of dollars/Pounds of wealth is wiped away while the other choice was to face the risk of total collapse.That is the real story. Here are links to a four hour documentary on Americas Public Broadcasting Service (Americas BBC) broadcast May 25th 2012 describing the epic story of the 2008 financial meltdown and its consequences today.Not every ones cup of tea I know but if you really seriously want to know why we are in the mess we are in then watch these programs. Program I of 4 How the good times were funded and where it started going wrong http://tinyurl.com/7vd52x4 Program 2 of 4 The 2008 financial meltdown in real time-chilling. http://tinyurl.com/6t839rc Program 3 of 4 The Politics of the financial crisis http://tinyurl.com/7bmcuhr Program 4 of 4 How it spread to Britain and Europe http://tinyurl.com/79hlm5d Watch it if you dare if you want to know the truth the politicians hide from us.Forget the Tory,Labour,UKIP blame game.The truth is far bigger than all of them.

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  • Stork  |  August 07 2012, 11:14PM

    Karen362 What doesn't work that way anymore ?

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