EXPERIAN PLC UK, 31 May 2016 - Research from Experian reveals that Scottish towns have shown the biggest progress in personal insolvency levels, compared to the first quarter of last year. 15 of the UK's 20 most improved areas are based in Scotland. Overall, personal insolvencies fell by 13% across the UK between January and March this year.
New laws that came into force in Scotland [1] in April last year have likely driven this significant improvement. The new laws see people in financial difficulty being directed to debt advisors and provided with a broader range of options to get back on track, meaning less people have to rely on insolvency as the only solution. Economic improvements and Scotland's Debt Arrangement Scheme, which freezes interest and charges on debts, are likely to also have contributed to the improvement.
Across the UK, people renting long-term in social housing showed the biggest improvement, with a 17% drop in people in this group becoming insolvent compared to the same time last year. Families with children living in low-cost homes experienced the next biggest improvement, as personal insolvencies dropped by 10% on the same period last year.
Experian's Jonathan Westley said: 'It's encouraging to see the impact of the recent changes in Scotland, and that social housing renters and families on tight budgets are leading the way in falling insolvency rates across the UK. However, despite the many positive signs, there are still pockets of the country which are feeling the strain and the need for responsible lending is greatest. It's vital that providers have a full picture of their customers' specific needs, characteristics, and financial situation.'
Other highlights include:
- Kilmarnock saw the biggest drop in insolvency rates in the last year, falling from 7 insolvencies in every 10,000 households in Q1 2015 down to 2 in every 10,000 in Q1 2016.
- Bromsgrove in Worcestershire saw the biggest increase, with insolvency rates more than doubling from 5 in every 10,000 households in Q1 2015 to 12 in every 10,000 households in Q1 2016.
- Seaside towns also continue to house the highest insolvency rates in the country. Scarborough topped the table with a rate of 14 in every 10,000 households, followed closely by Torquay.
Westley added: 'We work with lenders to give them a good view of their customers so they can treat vulnerable customers fairly. But for people feeling financial pressures, possibly due to higher property prices and living costs, the road back to recovery can be difficult. It's possible to come back from insolvency and with patience and the right guidance you can rebuild a positive credit history. Understanding how lenders will view your credit report in light of insolvency is vital.'
Getting back on track
Here are some steps from Experian that people can take to help them regain control of their finances and get back on track after a period of financial stress:
- Consider your options: Bankruptcy is a special legal status which will see some debts written off, but this is not the only option available. Informal agreements called Debt Management Plans (DMPs) or more formal agreements like Debt Relief Orders (DROs) or Individual Voluntary Agreements (IVAs) may be more suitable for those in financial difficulty, so take the time to understand the differences between each. Formal debt solutions vary in different parts of the UK.
- Seek advice: Organisations such as Citizens Advice, National Debtline and StepChange Debt Charity have experts who can provide you with guidance and help you find a solution that suits your situation. It is important to remember there is support if you need it.
- Rebuild a positive credit history: While lenders may view a past insolvency negatively, there are products with low limits and high interest rates available for people with poor credit ratings. Using a credit card for small purchases such as groceries, and paying what you owe each month will help show lenders you're making progress and can be trusted to pay back what you owe.
- Manage your credit responsibly: As you start to get back on track, making all repayments in full and on time each month will show that you are managing your finances, and your credit rating should improve over time. Be patient and take it step by step.
- Choose wisely: As your credit rating begins to improve, don't be tempted to make a flurry of applications. This could make it appear that you're losing control and make lenders think you're living outside your means. Try to make no more than one application for credit every three months and use price-comparison websites to research and target deals you're likely to qualify for.
Table 1: Top 25 biggest improvers from Q1 2015 to Q1 2016
Rank | Town/Territory | Insolvency rate per 10,000 households Q1 2015 | Insolvency rate per 10,000 households Q1 2016 |
1 | Kilmarnock | 7 | 2 |
2 | Dumfries | 7 | 1 |
3 | Glasgow - Parkhead | 8 | 2 |
4 | Perth | 8 | 3 |
5 | Livingston | 9 | 4 |
6 | Glenrothes | 8 | 3 |
7 | Paisley | 6 | 2 |
8 | Edinburgh - Gyle | 6 | 2 |
9 | Dundee | 7 | 3 |
10 | Clydebank | 7 | 3 |
11 | Braehead | 6 | 2 |
12 | Motherwell | 7 | 3 |
13 | Kingston upon Hull | 14 | 10 |
14 | Abergavenny | 8 | 4 |
15 | Hatfield | 8 | 4 |
16 | Greenock | 6 | 2 |
17 | Hamilton | 6 | 2 |
18 | Coventry | 9 | 5 |
19 | Penzance | 13 | 9 |
20 | Dunfermline | 8 | 5 |
21 | Banbury | 7 | 4 |
22 | Falkirk | 7 | 4 |
23 | Barnsley | 13 | 10 |
24 | Hartlepool | 12 | 8 |
25 | Maidstone | 10 | 7 |
Table 2: Top 25 towns by highest insolvency rate
Rank | Town/Territory | Insolvency rate per 10,000 households Q1 2016 |
1 | Scarborough | 14 |
2 | Torquay | 14 |
3 | Chester-le-Street | 14 |
4 | Great Yarmouth | 13 |
5 | Bootle | 13 |
6 | Bromsgrove | 12 |
7 | Warrington | 12 |
8 | Chester | 12 |
9 | Lichfield | 12 |
10 | Northwich | 11 |
11 | Grantham | 11 |
12 | Nuneaton | 11 |
13 | Southport | 11 |
14 | Newport (Isle of Wight) | 11 |
15 | Dorchester | 11 |
16 | Lowestoft | 10 |
17 | Wrexham | 10 |
18 | Birkenhead | 10 |
19 | Plymouth | 10 |
20 | Weston-super-Mare | 10 |
21 | Grimsby - Victoria Street | 10 |
22 | Gloucester | 10 |
23 | Kingston upon Hull | 10 |
24 | Weymouth | 10 |
25 | Barnsley | 10 |
Mosaic Group | Description | Insolvency rate per 10,000 households Q1 2016 |
Family Basics | Family Basics are families with children who have limited budgets and can struggle to make ends meet. Their homes are low cost and are often found in areas with fewer employment options. | 15 |
Transient Renters | Transient Renters are single people who pay modest rents for low cost homes. Mainly younger people, they are highly transient, often living in a property for only a short length of time before moving on. | 11 |
Municipal Challenge | Municipal Challenge are long-term social renters living in low-value multi-storey flats in urban locations, or small terraces on outlying estates. These are challenged neighbourhoods with limited employment options and correspondingly low household incomes. | 10 |
Modest Traditions | Modest Traditions are older people living in inexpensive homes that they own, often with the mortgage nearly paid off. Both incomes and qualifications are modest, but most enjoy a reasonable standard of living. They are long-settled residents having lived in their neighbourhoods for many years. | 8 |
Aspiring Homemakers | Aspiring Homemakers are younger households who have, often, only recently set up home. They usually own their homes in private suburbs, which they have chosen to fit their budget. | 8 |
Vintage Value | Vintage Value are elderly people who mostly live alone, either in social or private housing, often built with the elderly in mind. Levels of independence vary, but with health needs growing and incomes declining, many require an increasing amount of support. | 8 |
Urban Cohesion | Urban Cohesion are settled extended families and older people who live in multi-cultural city suburbs. Most have bought their own homes and have been settled in these neighbor hoods for many years, enjoying the sense of community they feel there. | 6 |
Rural Reality | Rural Reality are people who live in rural communities and generally own their relatively low cost homes. Their moderate incomes come mostly from employment with local firms or from running their own small business. | 6 |
Rental Hubs | Rental Hubs contains predominantly young, single people in their 20s and 30s who live in urban locations and rent their homes from private landlords while in the early stages of their careers, or pursuing studies. | 6 |
Suburban Stability | Suburban Stability are typically mature couples or families, some enjoying recent empty-nest status and others with older children still at home. They live in mid-range family homes in traditional suburbs where they have been settled for many years. | 3 |
Domestic Success | Domestic Success are high-earning families who live affluent lifestyles in upmarket homes situated in sought after residential neighbourhoods. Their busy lives revolve around their children and successful careers in higher managerial and professional roles. | 3 |
Country Living | Country Living are well-off homeowners who live in the countryside often beyond easy commuting reach of major towns and cities. Some people are landowners or farmers, others run small businesses from home, some are retired and others commute distances to professional jobs. | 3 |
Senior Security | Senior Security are elderly singles and couples who are still living independently in comfortable homes that they own. Property equity gives them a reassuring level of financial security. This group includes people who have remained in family homes after their children have left, and those who have chosen to downsize to live among others of similar ages and lifestyles. | 3 |
Prestige Positions | Prestige Positions are affluent married couples whose successful careers have afforded them financial security and a spacious home in a prestigious and established residential area. While some are mature empty-nesters or elderly retired couples, others are still supporting their teenage or older children. | 2 |
City Prosperity | City Prosperity work in high status positions. Commanding substantial salaries they are able to afford expensive urban homes. They live and work predominantly in London, with many found in and around the City or in locations a short commute away. Well-educated, confident and ambitious, this elite group is able to enjoy their wealth and the advantages of living in a world-class capital to the full. | 2 |
-ENDS-
Notes to editors
[1] The Bankruptcy and Debt Advice (Scotland) Act 2014 came into force on April 1, 2015.
Contact
Ade O'Connor
PR Manager, Credit Services
0115 992 2645 / 07583 085 796
ade.o'connor@experian.com
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