Over 135,000 people in England and Wales were declared insolvent during 2010, which was a slight increase (0.7%) from 2009, revealed Government agency the Insolvency Service.
This included 59,194 bankruptcies which were down 20.7% on 2009, 50,716 IVAs, which were up 6.5% on 2009 and 25,179 Debt Relief Orders.
Steve Rees, managing director of debt management firm Vincent Bond & Co., said from March, debt advice will be harder to seek as the government plans to axe the £25 million-per-year Financial Inclusion Fund, which currently pays 500 experts to give free debt advice.
He said: “More and more people are being dragged down by debt, and they are about to have fewer places to turn to. One of the hardest things about dealing with debt is facing up to it.
“The commercial sector needs to clean up its act and get ready to deliver transparent, honest and worthwhile debt consultancy because free debt advice will shortly no longer be an option for many,” he added.
In the last three months of 2010, there were 30,729 individuals becoming insolvent, down by 13.6% compared with the same quarter in 2009.
Figures also showed that for the first time ever, more people signed up to IVAs than went bankrupt in the last quarter of 2010, with 12,508 people entering into an IVA at that time.
Pat Boyden, partner and personal insolvency expert at PricewaterhouseCoopers, said that current economic conditions, particularly with regard to interest rates and fuel costs, are likely to have an adverse affect on sole traders and small partnerships.
“The marketplace is awash with companies offering solutions to deal with debt problems, but those with more complex debt issues should not fall into the trap of grabbing at the easiest option and should make sure they seek expert advice as soon as possible,” he explained.