Personal insolvencies rate shows no signs of slowing

The number of individuals entering a personal insolvency procedure shows few signs of abating as the rolling 12-month insolvency continues to rise, representing the highest Quarter 3 figure since 2010.

The figures, released by the Insolvency Service today, reveal that there were 30,879 individuals entering either bankruptcy (4,122), a debt relief order (6,784) or an individual voluntary arrangement or IVA (19,973) in the third quarter of 2019.

Further, the statistics show that 1 in 365 adults entered a personal insolvency procedure in the rolling 12 months to the end of Quarter 3, being 30 September 2019, up from 1 in 382 adults in the rolling 12 months to the end of Quarter 2.

Alec Pillmoor, personal insolvency partner at RSM, said:

‘As we predicted, despite already seeing near decade long highs over the last 18 months, personal insolvency numbers continue to rise and have exceeded 30,000 for the fourth successive quarter for the first time since 2011 and recorded the highest quarter three total since 2010. Longer term we would anticipate that this will increase further as following a recent YouGov poll, conducted on behalf of the StepChange Debt Charity, 29 per cent of Brits expect their finances to actually get worse in the next year.

'The latest figures for Q3 show a significant increase of an 22.7 per cent in the levels of personal insolvencies when compared to the same quarter last year. Whilst there are certain macro and micro economic factors at work, particularly given the current economic and political uncertainty, personal insolvency numbers continue to indicate that despite high employment levels and low interest rates, customers remain over-optimistic when it comes to estimating their ability to meet repayment demands when they fall due.

'Looking into the numbers, we continue to show concern at the steady rise in the proportion of personal insolvencies affecting the 18-25 age group. We estimate this age group now accounts for over 7 per cent of the total insolvencies in a single quarter for the first time.

‘Continued access to easy money, and the prevalence of a cashless society makes it increasingly difficult for consumers to monitor their spending and maintain a budget effectively. Moreover, it is entirely feasible that those within the 18-25 age group are without financial experience or understanding, and in the absence of sufficient education from schools or finance providers, it is difficult to see these trends slowing any time soon.’