700,000 people are excluded from official British insolvency figures, according to research by R3 who are the trade body for Insolvency Professionals. The reason is that these ‘hidden debtors’ are not officially classed as insolvent, as Debt Management Plans are an informal creditor agreement.
If Debt Management Plan consumers were added onto official insolvency figures (which includes IVA and Bankruptcy orders), the number of insolvent individuals reaches close to one million. By the end of 2008, there were 190,000 cases of bankruptcy and IVAs, but this is dwarfed by the 700,000 debt management plans.
R3 President, Peter Sargent, comments: “The official figures are only the tip of the iceberg in counting the UK’s insolvent individuals. If the government wants to take an accurate picture of our debt problem, DMPs (Debt Management Plans) should be included in the official figures.”