Let’s stop shaming people for getting help with their debts

Dealing with problem debt is not something to be ashamed of. Neither is taking an insolvency solution: DRO, IVA, Trust Deed or bankruptcy. In fact, it can be the most suitable, sensible solution to a difficult situation. People who seek advice and take action to manage their debts should be commended. So why, when people take this option, are their names and addresses made public?

In the debt advice sector we spend a lot of time discussing how to remove the stigma of debt – and yet we still have a public register whose original purpose was to create stigma. There’s been a form of public insolvency register in the UK since at least the 18^th century. According to the National Archives the oldest bankruptcy records date back to 1753.  In fact it wasn’t until 1869 that imprisonment of debtors came to an end.  Since then our attitude to those struggling with problem debt has, thankfully, continued to evolve – but the public register of people with debt problems hasn’t.

Many people with problem debt say that they feel ashamed.  It’s a major factor that holds people back from seeking debt advice earlier. Being ashamed just adds to the mental health impacts that problem debt can bring. A public register of people who are insolvent only serves to heighten that shame and delays engagement with debt advice.

More than ever before, the pandemic has brought to the fore that many of us are just an unforeseen life event away from having a debt problem: losing our job, becoming too ill to work, relationship breakdown – or perhaps even suffering economic abuse.

We need to break down the taboo of debt – which means encouraging people to feel comfortable and able to speak about their debts. To do this, they need to have confidence that their conversation with a debt adviser will remain confidential. There’s no need for their neighbours to be able to find out that they’ve started a debt solution. We know from speaking to customers that some are put off taking a debt solution that’s suitable for them – be that bankruptcy, an IVA or a DRO – because of the ‘stigma’ of being on the public insolvency register.

Being on the public insolvency register also brings unsolicited marketing approaches – for example from firms promising to reduce your debt repayments, to those offering credit.

Inclusion on the public register could put some people at risk, for example of violence or abuse from an ex-partner. In these cases, the debt solution provider has to apply to the court to exclude the individual from the public register for their own safety. This is an extra cost both for the advice provider and the court service.

Of course, there is a need for a register of those that are insolvent – it just doesn’t need to be publicly available. A closed register could be accessible only to creditors, credit reference agencies and other organisations with a legitimate need to use the data. The information that they need to make informed lending (and other) decisions, would still be available to those that need it.

In fact, this has already been acknowledged in the design of the new Breathing Space register. There will be a register, run by the Insolvency Service, of those that have entered Breathing Space.  Crucially, though, the register will not be public. It will be available to debt advice providers and those creditors that will be bound by a customer’s moratorium.

We believe that bringing an end to the public register should be on the agenda of the Insolvency Service and government. Whilst it may be beyond the scope of the current proposed changes to DROs, the law should be changed for all insolvency solutions.

This public shaming is another barrier to access vital debt solutions, and one that should be addressed as a matter of urgency. The current system simply serves to re-enforce the damage done to the mental health of those with problem debt.