The most recent figures from the Insolvency Service showed 22,503 people went insolvent across England and Wales in the second quarter of 2016, marking a 22.4% increase on the same period last year and a 6.9% upswing on the previous quarter. Experts predict Friday’s figures will show around 24,000 personal insolvencies in the third quarter. Accountancy network RSM expects to see around 4,000 bankruptcies, 13,500 IVAs and 6,500 DROs.
Mark Sands, personal insolvency partner at RSM, said personal insolvency levels had been on a general downward trend for six years, “so this increase may be a temporary blip. However if, as feared, it reflects continued underlying debt problems with the millions of people struggling to make ends meet month to month, then the expected increases in the costs of living highlighted in the recent increase in inflation would all suggest that the days of falling personal insolvency levels may be at an end. We have seen extremes at both ends of the spectrum this quarter – with 18-year-olds in Bromley and Bradford entering into formal insolvency procedures, highlighting a worrying level of rapid spending on credit and/or finance since turning 18; and two 93-year-olds in Bradford and Harrow struggling with debt. If the predicted upward trend continues, these may not just be anomalies and we may see more young people and elderly debtors facing insolvency proceedings in the future.”
Figures from the British Bankers’ Association (BBA) this week showed a strong consumer appetite for credit cards and personal loans, as consumer credit was growing at its fastest rate in nearly a decade. Maureen Leslie, president of the Insolvency Practitioners Association (IPA), and insolvency specialist at mlm Solutions, said that given continued low interest rates it is difficult to understand why the number of people going insolvent appears to be increasing, adding: “U nless those in debt feel more comfortable about seeking a solution, rather than struggling on. Perhaps insolvency is more socially acceptable than a few years ago.”