The latest results Insolvency statistics from The Insolvency Service for Quarter 1 (January to March 2016) reveal that Personal Insolvency numbers have gone up. The main findings of the report were:
- Total individual insolvencies increased this quarter, driven primarily by an increase in individual voluntary arrangements. This was the highest number of individual insolvencies since Q2 2014.
- Personal insolvencies rose 6.7% from Q4 2016 to Q1 2017 and are 15.7% higher than this time last year.
Commenting on the insolvency statistics Arian Hyde, President of insolvency and restructuring trade body R3 says: “The personal insolvency increase has been driven by further rises in Individual Voluntary Arrangement numbers – which is more of an indication of easier access to IVAs than increasing financial problems – but it’s notable that bankruptcies have begun ticking up a little.”
“Rising bankruptcies are perhaps a better indicator of worsening debt problems as access is less flexible – although the introduction of an online application process in April 2016 has made things simpler for people in debt. Bankruptcies are often triggered by someone’s own company failing, over-spending, job loss, or wage reductions, or relationship breakdowns.
“Although borrowing rates remain at record lows, rising inflation and slowing real wage growth will be limiting people’s financial room for manoeuvre. Compared to where insolvency numbers were a few years ago, personal insolvency rates are still low and the recent bankruptcy rises have been very small. However, a continued gradual upwards shift may be a sign that the post-recession return of high levels of consumer borrowing and spending is starting to reach its limits.
“The increase in IVA numbers is harder to assess. It may be down to increased insolvencies but it is just as likely to be because IVA providers have made it easier for insolvent individuals to set up an IVA, or because people have been switching from a non-statutory debt management plan to the statutory insolvency regime. “It should be remembered that the statutory insolvency numbers do not give the full picture of personal insolvency in England & Wales. There are potentially hundreds of thousands of people in non-statutory debt management plans, but unfortunately, there are no official statistics on these. Better information would give us a better understanding of the personal insolvency landscape. A register of debt management plans would be a good step forward.”