More people were unable to pay their debts in Cumbria in 2022, new figures show.

The figures come as Citizens Advice warns people are at risk of "spiralling into debt" amid the cost-of-living crisis.

A person becomes insolvent when they are unable to pay their debts – and are left with a choice of declaring bankruptcy or taking on measures to pay them back.

New figures from the Insolvency Service show there were 1,138 personal insolvencies in Cumbria over 2022, up from 931 in 2021.

However, this was still lower than before the pandemic – in 2019, 1,142 insolvencies were registered in the area.

Morgan Wild, head of policy at Citizens Advice, said: “The cost-of-living crisis is far from over. We’re seeing huge numbers of people under significant financial pressure, with many at risk of spiralling into debt.”

However, he warned "the system that’s meant to help people is often making their situation worse".

While bankruptcies have declined nationally in recent years – from nearly 17,000 in 2019 to under 7,000 in 2022 – there have been an increasing number of 'Individual Voluntary Arrangements', which can involve high fees from private providers.

IVAs involve a person in debt agreeing to a repayment plan with their creditor, who may agree to reduce or stop interest payments over the same period.

In Cumbria, 801 IVAs were granted in 2022, along with 48 declarations of bankruptcy.

In May 2021, the Government launched its Debt Respite Scheme which saw people unable to pay debts become eligible for a "breathing space" and means creditors cannot pursue legal action against them for a set period while they sort their finances out.

Across England and Wales nearly 112,000 registrations have been made for a breathing space since the scheme launched – including 1,077 in Cumbria.

StepChange, a debt charity that administers breathing spaces, said the scheme has broadly been a success.

However, they would like to see the grace period extended, and added the scheme had teething problems early on.

A spokesperson for the Insolvency Service said: “Ensuring individuals in financial difficulty have access to effective solutions remains one of our top priorities, and that is why costs for administering personal insolvency procedures are kept to a minimum.”