A SURGE in the number of people becoming insolvent has prompted a fresh warning from a Redditch-based finance specialist about the need for individuals and business owners to manage their finances "closer than ever".
The alert comes from Alistair Hayward-Wright, managing director at Hayward Wright Chartered Accountants, as latest figures from the Insolvency Service highlighted that 27,029 people were made insolvent in England and Wales during the second quarter of 2014 - a 5.1 per cent increase on the same period last year.
The figures also suggest that the increase was driven in part by a 20 per cent rise in the number of Individual Voluntary Arrangements (IVAs) - a plan which is settled in order to pay off debts to creditors over an agreed period.
Mr Hayward-Wright, said: “These latest statistics are worrying, especially as interest rates are set to rise, but they aren’t entirely unexpected.
“There are a number of factors involved but the rise can be heavily attributed to our ‘buy now, pay later’ culture and the pre-credit crunch period, when cars, electronics and furniture were simple to secure. As credit started to dry up people and, indeed, businesses have found themselves overwhelmed by historic debts.
“It’s fair to say that everyone faces financial pressure at some point in their lives but the fate of financially-stretched households and businesses can be changed through a number of money-management measures.
“Firstly, people and business owners should seek guidance and not bury their head in the sand. That advice can be vital as it can drive a number of crucial interventions at a time when finances need to be managed closer than ever.
“Initiatives such refinancing any borrowings to reduce monthly commitments, communicating honestly with creditors and something people often miss - cutting down on non-essentials, such as luxury items or corporate dinners - are simple but essential steps.”
Mr Hayward-Wright, who launched his firm in 2007 and now advises a growing number of individuals and businesses in Worcestershire, said tax was also a major consideration for people about to slide into bankruptcy.
He added: “I have seen people recently who haven’t claimed all the tax credits or subsidies available to them. Those oversights have contributed to their swim into some murky financial waters.
“But that’s where pro-active professional advice comes in, especially if people are considering bankruptcy or a debt management plan. Often people don’t know which direction to take and it takes untangling a web of paperwork to help improve the situation before the bailiffs knock at the door.”