Analysis from The Insolvency Exchange, part of TDX Group, reveals that volumes of personal insolvency in the UK are likely to see a significant spike in 2017. The company’s latest Insolvency Market Trends data highlights that new Individual Voluntary Arrangement (IVA) and Trust Deed (TD) applications continue to rise and volumes could increase by as much as 30% by the end of the year.
Richard Haymes, Head of Financial Difficulties at TDX Group, said: “When we look at the number of IVAs and Trust Deeds recorded, the year-on-year figures are quite startling. We saw a 45% increase in January 2017 versus the same month in 2016 and an increase of almost 20% in February 2017 against 2016 levels. “We’re still early in the year, but current trends show that volumes are likely to rise significantly, with IVA and Trust Deed numbers reaching over 70,000 in total. Inflation is a significant contributory factor to this increase, particularly as household bills, such as utilities and groceries, continue to rise, and will tip some of those ‘at risk’ into financial difficulty. For people who are already struggling with lower incomes, this will make their ability to keep on top of existing debts even harder.
“Creditors should note that we are seeing a significant change in the types of debts included in IVAs. Retail banks are seeing only limited growth in new IVAs with general annualised growth at c10%. However, near and sub prime creditors like credit card, catalogue and high cost creditors are seeing growth as high as 70%. This reflects post credit crunch lending patterns. As volumes continue to rise and new types of consumers begin accessing personal insolvency solutions for the first time, creditors need to work hard to understand the extra pressures on their customers and effectively support them through this difficult situation by offering constructive, and rehabilitating, solutions.”
TDX Group data is corroborated by recent figures released by Stepchange debt charity showing that record numbers of individuals are seeking debt advice and personal debt levels have risen for the first time in eight years, with average unsecured debt increasing from £13,900 to £14,251. Whilst statistics from the UK Insolvency Service at the end of 2016, highlighted a 23.2% increase in the number of IVAs in England and Wales during 2016 and predicated that this trend could accelerate and become more serious in 2017.