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Why insolvency alone cannot provide a new start for people in severe financial crisis.
Download reportEach year in the UK, 130,000 people trapped in inescapable debt are offered the chance to start afresh through an insolvency solution. This brings powerful release from the financial and personal strains that crisis debt places on individuals and families. Yet, Debt Advisors are increasingly seeing clients in persistent poverty with broken budgets where insolvency alone cannot provide a complete new start.
Unlocking a new start is informed by analysis of the financial circumstances of 1,953 households being supported by the Insolvency team at Christians Against Poverty (CAP) and four focus groups with CAP’s Debt Coaches and Advisors.
The research reveals five financial constraints that continue to hold CAP clients back post-insolvency:
39% of CAP clients on an insolvency route have less than half the amount needed for a sustainable budget (page 4)
It would take the average CAP client on an insolvency route over three years to save £750 (page 5)
An average CAP client is estimated to lose £126 in erroneous deductions post-insolvency (page 5)
1 in 3 CAP clients have an excluded debt they have to repay post-insolvency (page 6)
Clients bank accounts can be closed and credit ratings impacted.
It is a package of holistic support that truly makes the difference in helping people move forward, break social exclusion and recover from the whole-life effects of problem debt. CAP’s Debt Advisors view insolvency solutions as a fantastic tool and a vital part of achieving positive client outcomes.
To unlock a new start for more people post-insolvency, we also make the following recommendations: