Social stigma surrounding insolvency is declining in Yorkshire

45% of adults in Yorkshire and the Humber believe the ‘social stigma’ attached to entering an insolvency procedure has fallen over the last decade, close to the national level of 50%, according to research by insolvency trade body R3 and ComRes.

51% of adults in the region currently believe there is a stigma attached to entering an insolvency procedure, compared with 48% across the UK.

Adrian Berry, chair of R3 in Yorkshire and partner at Deloitte LLP, said: “The idea of ‘stigma’ around entering an insolvency procedure is one of the barriers to people dealing with problem debt. It’s very welcome that there is an increasingly non-judgemental attitude to people entering an insolvency procedure.

“People can end up with unmanageable debts for all sorts of reasons. What’s more important is that people with problem debt seek advice early to find a solution to their problems as quickly as possible. This increases the chances a solution can be found that works for them and their creditors. If people in debt don’t consider all their options they could miss out on the most effective solution for their problem.

“It’s better that someone considers an insolvency procedure to resolve their debts than it is for them to not consider all possible solutions to a problem which might only get worse otherwise.”

The research also revealed that only 31% of adults in Yorkshire and the Humber see entering an insolvency procedure as ‘an easy way out’ from having to repay debts (37% nationally). And, only 31% of adults in the region agree that someone’s insolvency is more likely to be caused by their own reckless spending than a factor outside of their control, again lower than the level across the UK of 37%.

Just under half (47%) of adults in Yorkshire and the Humber agree insolvency can be an opportunity for a fresh start.

Mr Berry continued: “The fall in stigma is probably linked to the big rise in debt and insolvencies since the turn of the century. An explosion of consumer debt levels led to more insolvencies, which helped make the idea of entering insolvency less unusual. This, in turn, might have made people more likely to use an insolvency procedure to deal with unmanageable debts.”

In 2000, there were 29,000 personal insolvencies, or 7.2 for every 10,000 adults. In 2014, there were 98,000 personal insolvencies, or 21.8 for every 10,000 adults.

Mr Berry added: “The insolvency regime is there to provide a balance between creditors and those in debt. On the one hand it provides debt relief to those who are struggling. But on the other, it helps creditors see more of their money back than they otherwise would have done. There are sanctions for those who have recklessly accumulated debt too.

“The fact that there is less stigma around insolvency shouldn’t encourage people to rack up debt. It just means there are fewer barriers to dealing with problem debt when it does occur.”

Looking to promote your product/service to SME businesses in your region? Find out how Bdaily can help →