I had been reading the news today, and thought I would strike up an intellectual conversation with a friend, so I started by saying “Have you head about the insolvency high?”, to which they replied “Is that something to do with the effects of sniffing glue and lighter fluid?”!!! So I then had to explain that insolvency was being unable to pay your debtors, and basically declaring yourself bankrupt. At that point I stopped talking about the news that I had heard, and thought I would share it on here for those who may live in a world without the BBC, or ITV, or 24hour Sky News!

So, the news that has recently come to light is that in 2010, personal insolvency within the UK hit a high for the first time since 1960. The Insolvency Service has advised us that it has risen by 0.7% on 2009.

So just how may people were declared insolvent last year? Well, the figure is 135,089 – which is enough people to fill the new Wembley Stadium one and a half times! May or may not seem like many, given the population of the UK, but that is alot of families to have had their lives effected by money last year. The stress, the arguments, the cutting out of treats etc etc.

There are three forms of insolvency which make up the numbers we have seen above.

• Bankruptcy: The traditional way of escaping overwhelming debt. Ends after one year, but you are likely to lose all your assets including your house to pay something to the creditors
• Debt Relief Orders: Introduced in April 2009, these allow consumers with debts of less than £15,000 and minimal assets or surplus income to write off debts without a full-blown bankruptcy
• Individual voluntary arrangement (IVA): A deal between you and your creditors, overseen by an insolvency practitioner. Less stigma, less chance of losing your home, but involves paying some of your debts in one go or over a number of years

So what can you do to avoid adding to the 2011 insolvency figures?

Well, there are companies that can help you with your debts such as The Money Advice Group. MoneyAdviceGroup.co.uk offer immediate UK debt solutions from Debt Management, IVAs and Debt Consolidation. They only employ experienced debt advisers, and have helped thousands of clients with financial difficulties regain control of there finances. So, start by having a look at their website to see if they can help you, and whether their service suits your needs.

If they aren’t what you are looking for then there are more companies out there that can help, such as Debt Line who offer the only fully online debt management service in the UK. They are currently dealing with over £215,000,000 worth of the UK’s debt for more than 16,000 customers and their online business is rapidly growing.

Debt management means that Debt Line’s clients stop getting creditor hassle, have a freeze on their interest and charges on their accounts and can relax knowing that all of their debts are being dealt with for them. They ensure that their customers only pay what they can afford leaving them with more money every month and no more struggling.

Of course, one thing to be aware of is that personal insolvency does effect your chances of getting credit in the future. It’s important that you rebuild your credit score.

If you have first hand experience of having to declare yourself bankrupt, or partaking in an IVA then please share below.

Bankruptcy is an ugly word, but a very real possibility to many people struggling to pay a laundry list of bills that never seem to end. At times, that pile of bills seems impossible to deal with, a mountain you’ll never get out from under without taking drastic measures. But bankruptcy isn’t the only alternative to a life chained to the never-ending cycle of bills, late fees and more bills.

Think about consolidating your debt in a single loan, a form of refinancing that helps you put your finances back in your control and your life back in order. But refinancing is for people who own a home, right? What if you don’t have a home, or you don’t want to risk losing it by putting it up for collateral? That’s where an unsecured debt consolidation loan comes into play.

Unsecured debt consolidation loans do not require collateral. You can pay off all your other creditors and keep your house – or lack thereof – out of it. Lenders are able to stay in business by covering their risk with higher interest rates than they offer on secured loans.

But this can still translate into lower monthly payments for you, especially if your credit cards carry high interest rates to begin with and you’ve fallen into the trap of paying late and accruing late payment fees. Those disappear when you pay off that debt with the moneys from your are competitive and you may be able to negotiate a better interest rate. It helps to have a good unsecured debt consolidation loan. And don’t forget, shopping around always pays off; lenders credit score since lenders do look at your credit and employment history when they consider you for a loan.

If you shop around, negotiate, and still find that the interest rate is not going to make enough of a difference in your monthly payment to make life comfortable again, consider choosing a long-term loan. While you will generally end up paying out a greater total amount by the end of the loan, lengthening the life of your unsecured debt consolidation loan will lower your average monthly payment. That right there could make all the difference in the world.

Unpaid or slow-paid bills wreaking havoc on your credit score? Some lenders will consider you despite your credit history. A good employment history proves stability, and even if you don’t have the best employment history there are, again, lenders who will offer unsecured debt consolidation loans to almost anyone. While the interest rates are higher and the limits to what they’ll loan are lower, your credit score will improve when you get the loan, and having all those creditors paid off will do nothing but increase your credit score.

If you bills are getting the best of you to the point that you’re actually considering bankruptcy, stop. Gather up those credit card bills, utility bills, department store card bills, medical bills and any other bill that’s costing you sleep at night. Look into an unsecured debt consolidation loan and see how easy it can be to save your credit and peace of mind.