Preston is one of the top 10 locations in the country in terms of the number of people taking up a new type of insolvency procedure.
New figures from the Insolvency Service show that 140 people in the Preston constituency took out Debt Relief Orders in 2014. That makes it the eighth most popular location for DROs in England and Wales.
DROs were introduced in 2009 as a low-cost alternative to bankruptcy for people with lower incomes and less than £20,000 of debt.
In total there were 255 personal insolvencies in the Preston constituency in 2014 – an insolvency rate of 34.6 per 10,000 adults, compared to the national average of 21.8. The insolvency rate in other constituencies in Lancashire varied from 15.3 in Wyre and Preston North to 37.5 in Blackpool North and Cleveleys.
Richard Wolff, North West chairman of R3 and head of corporate recovery and insolvency at law firm JMW, said: “Nationally the number of personal insolvencies has been falling since 2009 so it is difficult to interpret why some areas such as Preston have seen a rise in numbers.
“Debt Relief Orders are particularly popular in Preston and account for over half of the total number of personal insolvencies, which indicates that these are people with smaller amounts of debt.
“The bankruptcy process is set up to deal with debts of over £20,000, assets over £1,000 and requires an upfront payment of £705 so ironically it tends to exclude those with lower incomes.
“Before the introduction of DROs, many of these people would have been unable to find a solution so, on a positive note, it is good that those who need help in seeking a resolution to their problems are making use of this new procedure.”