A rising number of Cumbrians are battling against debt, with more than 800 declared insolvent in a year.

One leading advice charity in the county says increasing levels of “in-work” poverty are now fueling the problem as working adults whose wages have stagnated struggle to make ends meet.

Government figures reveal that every local authority area in the county last year saw a significant rise in insolvencies.

Women topped the list of those declared unable to pay their debts.

Carlisle saw the highest number of insolvencies – 193. Of these 107 were women.

The next highest number of insolvencies was in Allerdale, where 182 individuals were insolvent, 107 of them women.

That figure meant Allerdale was the 86th most insolvent area in the country, according to the Government's Insolvency Service.

In Copeland, women also outranked men for debt, with 83 declared insolvent compared to 51 men.

Andy Auld, chief executive of Carlisle and Eden Citizens Advice Bureau (CAB), said that throughout 2016 his volunteers and staff worked with more than 2,000 people who were struggling with debts.
Andy Auld, chief executive of Carlisle and Eden CAB.

“We're seeing many more working people coming to us these days with debt problems,” said Andy.

“Ten years ago, we'd see people in debt because a major life event had meant they couldn't meet their commitments.

“It could be things such as divorce, bereavement or ill-health.

“Even when illness is temporary, you can see how people with financial commitments could easily spiral into debt.

"We still see that, but now we also see a lot more working people who just can't pay their way.

“Their wages have stagnated over last eight to 10 years.

“They've seen no or very little increase in their wages, while the benefits system has also fallen behind when it comes to covering costs.

"We see couples who are both working, in some cases holding down more than one job.

“They're struggling, and it's not because of ill-health.

“It's because the cost of living – things such food and other goods – has gone up but their wages haven't.

"You have to remember that with the exception of Sellafield, Cumbria is a low-wage economy.”

Mr Auld said there is an established link between poverty and poor mental health.

Living with the constant worry of debt also puts a strain on relationships, he said.

Some people turn to loan sharks, or payday lenders, who are known to target the county's most deprived estates.

“Some are charging interest rates of two, three, or four hundred percent, which is legal,” said Andy.

Further evidence of Cumbria's debt crisis has come from the national StepChange debt charity.

During 2016, the charity's helpline took calls from 609 people in Carlisle alone – 34 more than in 2015.

Their average debt was £10,523.

The profound social impact of debt is seen regularly by Cumbria Law Centre, which offers clients free legal support and advice.


Pete Moran, from the Cumbria Law Centre. Pete Moran, the charity's most senior manager, said woman may dominate the current insolvencies statistics because so many single mums are juggling unmanageable finances.

“It can leave them vulnerable,” he said.

“It can be easier for a man to start again. Often the business of making ends meet is left to mums, so these figures are not a surprise to me.

"My sense is that the level of insolvency has nothing to do with profligacy, or people trying to have any kind of lavish lifestyle.”

One of the key consequences for those facing serious debt can be the possible loss of their home, whether it is being rented or bought on a mortgage, said Pete.

Last year, Law Centre staff and volunteers worked with 813 who were at risk of losing their home through eviction.

Of these, most – some 571 – were from the Carlisle area, though lower figures elsewhere in the county reflect the charity's capacity to do such work rather than the level of demand for help, said Pete.

At present, the number of debt relief cases being worked on by the charity is about 400, though this is not a major area of work for the Law Centre.

“Insolvency is rising steadily,” said Pete.

People who can't pay their debts usually have three possible options: bankruptcy, a debt relief order, and a so-called individual voluntary arrangement.

Bankruptcy orders are publicly advertised in the press, and involve handing over control of your key assets, including your home, which could be sold.

You are also barred during the bankruptcy from certain public offices, including being a councillor or magistrate.

But once you are discharged, your debts are written off and creditors have no right to pursue you for this money.

Debt relief orders (DROs) are an insolvency procedure for people with low incomes and no assets, who owe less than £20,00.

For many people in debt, particularly vulnerable people, they are the most suitable option but it is only possible to apply for one through an approved intermediary, which includes local CAB branches.

An individual voluntary arrangement is a formal agreement between you and your creditors to pay off part of your debts. It gives you more control of your assets than bankruptcy.

Pete added: “Debt relief orders have been a positive thing. They're another tool for dealing with insolvency.”

Paul Barber, from the Insolvency Practitioners Begbies Traynor, said: "It’s very easy to over-spend if you don’t have much money in the first place and penalties like unauthorised overdraft charges or missed payment fees can keep people in a debt spiral.

"Lower incomes and employment levels mean women are more likely to be vulnerable to financial shocks.

“By contrast men are more likely to become bankrupt.

"Bankruptcies tend to be associated with larger value assets or debts, and the failure of a business.

"Given men are more likely to own their own business or be in full-time employment, this is not a surprise.”


CAB debt case study

A single woman, with mental health and physical problems, Jenny was living in private rented accommodation.

She was unable to do her zero hours’ contract job because of her poor health and this left her struggling with a cripplingly low income.

As the debts mounted, the threat of legal action by her creditors caused Jenny significant stress – so much so her GP was concerned she had become a risk to herself.

CAB staff checked her entitlement to benefits to maximise her income.

Their advice included a suggested move from private rented to housing association accommodation.

The charity also assessed her financial circumstances and discussed her options.

Of these, she chose a debt relief order but could not afford the £90 application fee.

The CAB secured a grant from a local charity to cover that cost and then completed the application on Jenny's behalf.

The DRO was granted.

That means she was protected from legal action by her creditors. In 12 months’ time, if her circumstances do not substantially improve, she will be released from liability for her debts.

She will have the fresh start she needs.

* Jenny is not the client's real name.



Cumbria Law Centre case study

Frank was in his 50s and had separated from his partner.

Living alone in a three-bedroom property, his physical health was poor because of a long-standing and serious mental health condition.

As a result, he found it hard to take even quite basic care of himself.

He was so unwell that he couldn't work.

His housing benefit was cut as a result of the “‘bedroom tax’ rule and consequently he had to pay £30 towards his rent every week.

But Frank could only afford to pay £15 per week from his benefits.

He had previously paid regularly with no problem.

Arrears built up and his landlord started court proceedings to evict Frank.

Because he had rent arrears, he was barred from applying for a transfer to a smaller property with his local housing association.

When he went to Cumbria Law Centre for help, Frank was desperate and despondent.

The charity secured an adjournment of the court hearing and helped him to apply for a discretionary housing payment.

This was successful and enough to pay off his arrears in full.

The local council also agreed to help him pay the rent shortfall of £15 per week for a 12 month period.

This prevented further arrears accruing.

Law Centre staff continued to represent Frank at the next court hearing and the possession proceedings were dismissed.

The process was frightening for Frank and he confided he would not have gone to court hearings without support.

Following the last court hearing, Frank got his transfer to a one-bedroom property which he could afford, giving him stability and peace of mind.

* Frank is not the client's real name.