Personal insolvency levels surge in third quarter
Personal insolvencies jumped by 11% in the third quarter and are now 8% higher than a year ago, the latest figures from the Insolvency Service show.
There were more than 25,000 individual insolvencies across England and Wales in the third quarter, of which 14% were bankruptcies – accounting for 3,682 cases.
A further 6,274 cases were debt relief orders (25% of total) while 15,523 were individual voluntary arrangements (61% of total).
The rise in individual voluntary arrangements was a key driver behind the increase in overall levels of personal insolvency.
An 18.3% jump from the second quarter means individual voluntary arrangements are now at their highest level since they were first introduced back in 1987.
Insolvency and restructuring trade body R3’s Yorkshire chair, Eleanor Temple, has suggested that exhausted credit limits and falling real wages have helped to push up personal insolvency levels.
She added that an upwards trend has existed since mid-2015 and points to research from R3 which suggests that two in five people struggle to make payday.
However, it is also necessary to approach individual voluntary arrangement data with an air of caution, as the figures can be influenced by access to them and wider market conditions, rather than just individual indebtedness.
According to Ms Temple, bankruptcy figures remain stable, while the use of debt relief orders has increased slightly.
From early April 2016, the process for an individual to make themselves bankrupt was simplified, as the courts were removed from the process.
Any individual facing financial difficulty should seek professional advice at the earliest opportunity, as there may be a solution that they had previously not considered.
By contacting a professional insolvency practitioner, it should be possible to find an appropriate solution, from basic debt management through to bankruptcy.
By Phil Smith