Recently released figures have indicated that more and more people are doing this, with the number of insolvencies in the UK said to have hit historic highs.

In the third quarter the number of people becoming insolvent soared, breaking the previous high seen in the summer.

It is thought that the surge in insolvency numbers is linked to the new Debt Relief Orders, which are aimed at low income families or individuals. Many of these quickie Debt Relief Orders have been taken out by those that have seen their income reduced of have lost their jobs. The figures were released by the Insolvency Service.

One industry official said: ‘Unemployment and falling house prices is the issue as people seek advice when they have less surplus income. This has led to the rise in DROs in particular and they will continue to rise as debt advisers become more familiar with them and begin to recommend them on a more regular basis.’

Another said: ‘Three months ago, people may have had some equity in their property, but now they may not necessarily have that. They may not be in a position to pay off their mortgage and may have to turn to DROs as a last resort.’

One economist added: ‘Unfortunately, it is highly likely that individual insolvencies will continue to rise for some time to come, despite current mounting signs that the economy will finally return to growth in the fourth quarter. Unemployment has already risen substantially and is likely to climb significantly further, many people are suffering wage freezes or even cuts, debt levels have risen and credit conditions remain very tight.’

The watchdog group is targeting around twenty six of these firms following claims that they could be mistreating their elderly clients through misleading and unfair contracts. There are concerns over the fees that these companies may be charging to clients who decide to buy or let their properties in terms of exit fees.

The watchdog has expressed concerns that the contracts that come with these exit fees could be in breach of Unfair Terms in Consumer Contracts Regulations.

The OFT is now looking into these concerns and one official from the watchdog stated: ‘This investigation is motivated by the need to ensure that terms and conditions are clear and fair.’

The agency has contacted the twenty six companies, which are as yet unnamed, and has provided them with two weeks to respond.

An official from the charity Age Concern and Help the Aged stated: ‘This is good news for thousands of people living in retirement properties who are angry about the charges they incur when they come to sell or rent their homes. Rather than enjoying their retirement, older, potentially vulnerable people are experience a huge amount of stress and worry as they try to ensure the charges they are paying are fair.’

However, he said that whilst the OFT intervention was welcomed there was plenty of other measures that needed to be looked at. He added: ‘We have heard from hundreds of residents who are concerned about many unfair practices that retirement homes are carrying out. The Government needs to improve regulation across the industry as a whole and create simple ways to challenge unfair housing charges.’

The jobless rate in the country has risen by over 200,000 in the past three months alone, bring the total of unemployed to 2.47 million – the highest it has been in over 14 years. The unemployment rate stands at 7.9% today – up from 5.6% one year ago.

The recession has exacted a toll on the people and the economy of Britain. According to the figures released by the Office for National Statistics, only a few groups are experiencing any success in obtaining work, such as those in the public sector and foreign-born workers.

David Blanchflower, a former labour market specialist and official with the Bank of England, says that the numbers of those graduating from colleges and universities is the largest they have been for some time.

Thus the young people are coming out of school and unable to find jobs, which makes the recession that much worse for this age group. He fears that the graduates will have permanent scars because of the lack of job opportunities that are open to them.

Blanchflower went on to say, “Firms have stopped hiring at a time when there are lots of young people around. This is a national disaster. The Government needs to do everything it can to get them off the unemployment registers. I believe there is going to be another huge jump.”

His analysis of the job market for the young people of Britain was confirmed by the reports from the Organisation for Economic Cooperation and Development (OECD), which warns that joblessness will continue to rise for some time to come. There were 2.7 jobs lost between December of 2007 and July of 2009 and predicts that ten million more people will lose their jobs by the end of 2010.

OECD-wide unemployment is the highest it has been since it started keeping records at 8.35%. It predicts that this percentage will likely reach 10%.

Stefano Scarpetta of the organisation said, “We are facing a jobs crisis. This is the most rapid increase in unemployment we have seen since the early 1970s. There has been a huge increase in youth unemployment. We need to prevent a lost generation of young individuals who are not being given a chance.”

Almost 20% of young people in Britain are unable to find a job. A further 34.6% are classified as inactive, which means they are on sick leave or have become despondent with the job market and have stopped searching for work. The number of people claiming jobless benefits rose by 24,400 in August to a total of 1.61 million, the highest it has been since May of 1997.

The hardest hit areas of the economy are the financial services, construction and manufacturing and many employees are settling for minimal increases or freezes in pay. Average earnings have only increased by 2.2% in May, June and July of this year – the lowest rates since 2001.

The report was put together by the Scottish Widows UK Pension Report and relates to non-mortgage debt amongst consumers of retirement age. This further reflects the worrying levels of personal debt that are being seen in the UK amongst most age groups.

According to the results of the study non mortgage related debt, which includes that seen on personal loans and credit cards, has increased by over £600 since last year, and since 2007 has increased by over £1400.

Around one in six retired people also have an outstanding mortgage with around £50,000 outstanding on it, which again is an increase on last year of around £8000.

One industry official stated that the recession did not seem to be having any effect on the willingness of people to repay their debts, stating: “The recession has seemingly done nothing to encourage retirees to cut their debt, and with the possibility of the value of their property dwindling, they could be leaving themselves in a vulnerable position. Those in retirement should be able to enjoy life and not worry about the financial burden of debt, as well as their retirement income.”

Industry officials have said that given these rising figures and the worrying level of personal debt amongst those of retirement age it is increasingly important for those that are nearing retirement to ensure that they make provisions to clear off as much of their personal debt as they can to avoid severe financial problems.

This includes clearing as much oustanding debt as possible off credit cards, store cards, personal loans, and other non mortgage related debt.

How about leaving on your underclothes when you take a shower? This will save you on the amount of laundry that you have to do because you already have your smalls washed. How about using your tea bags the second time for your second cup or cutting them in half so that you get two cups of tea from one tea bag? It is quite easy to do by sewing two extra rows of stitches down the centre of the bag. These may seem like extreme measures, but many people are finding money very tight right now and are resorting to such measures.

Many hotels and other locations that cater to groups gathering for meetings offer free coffee. Simply watch the newspaper or TV to find out where such events are being hosted and pop in to receive your coffee free of charge. You can have a cup at the location and take one with you for the road. Bview.co.uk has collected numerous money-saving tips such as these that will help you cut down on some of your household expenses.

Taking extra packets of condiments, such as ketchup and mustard, at restaurants and take-aways is something that has been used for years to save money at home. You can store them in a drawer in your kitchen or even pour them into your empty bottles at home if you don’t want visitors to know that you have been collecting in this manner.

Order a glass or water with slices of lemon when you eat at a restaurant instead of paying for a glass of lemonade. Add sugar from the table to sweeten it to your taste. If you go out to the pub for a drink with your friends, you will have to buy a round of drinks. However, you can save on this too by being careful to be the last one to buy a round, especially if there are four or more in your group. By the third or fourth round, the others will have forgotten whose turn it is to pay and you can get away with having free drinks for the night.

Wash your car using the squeegee at the local petrol station or go through the lost and found at the rail stations to acquire some items that you need. You do have to be careful when you start scrimping though so that you don’t do something illegal and end up in more trouble than you bargained on having.

Kath Kelly is a prime example of a scrimper who managed to live on £1 per day for a twelve-month period. She found free buffets for her meals, shopped at church jumble sales for her clothing and bought the produce at supermarkets just before closing time when it was offered at reduced prices. As part of the challenge, Kath’s rent and utility bills were paid for the year, but she still had to survive on this budget and pay for all her other needs.

One of her tactics included picking berries from bushes to supply her diet with fruit. She became an expert at picking up loose change on the street, amassing over £100 in the year. Kath, who is an ESL teacher in Bristol, said her friends thought she was crazy to take part in this challenge thinking she would be freeloading off them during the year. However, she says it was not like that at all and she became the “queen of the buffet.”

Officials from the Ministry of Justice have said that the reason the firms were closed down was because they were making claims that were misleading and were also using hard sell tactics to get consumers to pay high fees in order to get assistance from them.

Consumers have been warned to steer clear of offers that sound a little too good to be true, and one Ministry of Justice official said that the situation was worrying because in the current climate an increasing number of people were desperate with regards to their finances and were therefore especially vulnerable.

Another official said that these firms had been targeting people that were in high levels of debt and who would be more open to the services that they were offering.

One spokesperson said that most of these companies were operating with rules and regulations, but he added: “However, some companies choose to flout those rules and some also target consumers who find themselves in debt. People desperate for a way out of their financial troubles can be vulnerable to the misleading marketing that the Ministry of Justice Claims Management Regulator is continuing to tackle.”

He also said: “There has also been a trend towards high-pressure cold-calling from call centres, including making unsubstantiated claims and encouraging people into handing over fees there and then – a decision they regret later.”

The advice and tips were offered by the Consumer Credit Counselling Service. Officials from the group said that consumers have been becoming more financially responsible over recent months, and have become more responsible with their borrowing, having seen just how much chaos can be caused through irresponsible borrowing and lax attitudes over debt repayments.

However, due to the recession and the financial climate some industry groups have said that the level of credit card and debt defaults could rocket over the next couple of years.

One official from the CCCS said that consumers who found themselves increasingly relying on credit cards to meet essential everyday costs could be heading for financial meltdown, and therefore it was important for consumers to start budgeting sensibly before things went this far.

He stated: “You need to take steps to confront your situation, and rectify it as soon as possible, and your first step should be to make a strict and truthful budget that will set out your finances and help you see where you are overspending, can cut back, and such like.”

Consumes have also been advised that if they do find themselves in a situation where they are struggling to repay their debts or sort out a sensible budget they should seek professional advice from debt charities or the Citizen’s Advice Bureau.

Officials from the Organisation for Economic Co-operation and Development claim that British families have the highest debt levels of any major economy, and this is driving many of them to financial ruin.

Between April and June of this year banks are said to have written off around £1 billion in credit card debt, and these figures are expected to be confirmed over the coming weeks in a report from the Bank of England.

The figure is said to be the highest since the last recession in the early 1990s, and is sixteen times higher than in 1997 when the current government came into power. It is also expected to continue rising over the course of this year.

One insolvency specialist stated: ‘More and more people are staring financial ruin in the face. The number defaulting on their credit card debts is growing, and therefore the number of personal insolvencies will grow over the next two years. We have lost the value of thrift in this country, and so people don’t have any savings to fall back on. This is all very well when people are earning, so they can afford to service their debt, but if they lose their job they’ve had it.’

The Tory Party put the blame at the doorstep of Prime Minister, Gordon Brown, stating: ‘The thousands of families being pushed into credit-card default is the human face of Gordon Brown’s decade of irresponsibility.’

However, the ongoing financial crisis and slumping economy resulted in the Bank of England deciding to slash the base rate in a series of dramatic cuts last year, and between October of last year and April of this year the base rate fell to just a tenth of its level, dropping from 5 percent in October to just 0.5 percent by April.

Of course, for those on variable rate mortgages this has resulted in repayments plummeting. After a period of financial hardship the cut in base rate came as a welcome relief to many homeowners, with some finding that their repayments have been cut by a huge amount due to the lower base rate. Since April of this year the base rate has remained unchanged at 0.5 percent, which is the lowest level in the three hundred and fifteen year history of the Bank of England. Furthermore many industry officials have predicted that in the current climate the central bank plans to keep the rate at this level until around the middle of next year, at which point rates may start to rise again.

This means that consumers who are saving money because of the lower interest rate should think carefully about how to most effectively use this extra money before rates start to rise again, and there are a number of options open that could really benefit you in the future in terms of your debts and finances. Many homeowners who have seen their repayment requirements drop through the floor have already realised just how invaluable this extra money can be towards their future, and have found far more effective ways of using this cash than just blowing it.

One obvious and very effective way in which you can use this extra money is to overpay on your mortgages, and this will benefit you in many ways. You can save huge amounts of interest to the tune of tens of thousands of pounds in some cases simply by overpaying on your mortgage repayments each month. What’s more you can also reduce the term of the mortgage by a significant number of years, so you will pay far less and clear your mortgage debt far earlier.

If you do not wish to use the extra money to make top up payments of overpayments on your mortgage there are also a number of other effective ways in which you can use this extra money. If you have credit card debt hanging around your neck then it can be very beneficial to make extra payments on your credit card balances with the extra cash, as this will help to release you from this burden of debt, and could save you years of repayments and a fortune in interest.

You could also put the money towards other debts such as loans and car finance, which again would rid you of debt far earlier and could mean big savings in interest. Using the extra money to pay off your debts will help to release you from repayments far more quickly, and the very low interest rate at present provides the perfect opportunity to do this. For homeowners the general consensus seems to be that overpayments on mortgages is the best option, so this is definitely something that you should consider.

Traditionally, forced property sales have been enforced as a result of non-payment of secured loans that have been secured against the home, but one report suggests that over recent years lenders have increasingly turned to charging orders to force the sale of a property to repay an unsecured loan.

There has been a seven-fold increase in the number of charging order applications since 2000 according to the Citizen’s Advice Bureau.

These charging orders can result in the forced sale of a home through the courts even for the payment of unsecured loans. This may prove a particular worry for homeowners in the current climate, with many people falling behind on repayments on unsecured finance due to the difficult financial climate and the ongoing recession.

A report from Citizen’s Advice, entitled Out of Order, goes on to claim that in some cases lenders are threatening homeowners with these charging orders in a bid to make them pay far more than they can reasonably afford to pay.

The charity also warned that lenders are finding it increasingly easy to apply for charging orders, and in the current climate an increasing number of lenders are looking into using this route.

One CAB official said: ‘The law as it stands leaves debtors far too exposed to unfair treatment and the risk of losing their homes from unsecured creditors. Some creditors are using the court process as a tactic to intimidate vulnerable debtors into paying unaffordable amounts. This is not only unfair to the individuals concerned who have offered payments towards their debts but is also unfair to other creditors.’