Unemployment ‘can trigger personal debt’

People who are unemployed may be more likely to struggle with debt and become insolvent, it has been claimed.

Peter Law, president at R3, was speak…

People who are unemployed may be more likely to struggle with debt and become insolvent, it has been claimed.

Peter Law, president at R3, was speaking in response to the latest official insolvency statistics that recorded an increase in people utilising the option.

He said: “The rise in unemployment is, sadly, unsurprising: unemployment is a factor that can trigger personal insolvency.

The industry expert stated that unemployment and business insolvency statistics are “usually closely related”, but noted that corporate figures showed a reduction rather than the expected elevation.

He added that one of the main reasons for this rise is that more business owners are choosing to enter into membership voluntary liquidations, as opposed to waiting for formal insolvency.

Director of Credit Action Chris Tapp recently predicted the number of personal insolvencies recorded in the UK in the coming months will remain high as unemployment is expected to increase in 2010.

By Joe Shervin

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