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A new report from the Department for Business, Innovation & Skills stresses that personal insolvency processes should protect vulnerable individuals, as part of a fair and well-regulated credit and debt industry.

In a review of the short-term loan industry – including high-interest ‘payday loan’ providers, BIS states that credit should be available to consumers, if they decide it is an appropriate option for their needs.

This means people should continue to be able to arrange very short-term loans at high rates of APR – however, by paying the money back quickly, they should not face the punitive costs implied by annualised rates of 1,700% or more.

Business minister Norman Lamb says: “Payday loans should only ever be used as a short-term financial stop-gap, not as a long-term solution to financial difficulties.”

For individuals in severe financial circumstances, meanwhile, personal insolvency remains an option, with several forms of debt management now in existence.

Bankruptcy is no longer the only option; individual voluntary arrangements and debt relief orders can also help in some circumstances.

With a focus on helping the individual in question, professional insolvency advice can help to identify the best of these solutions, or any other means of recovering a difficult financial situation, without having to take on more high-interest debt.