Personal insolvencies reach eight-year high

The number of individuals entering insolvency is at an eight-year high with insolvency voluntary arrangements hitting a record high, according to new official figures published today. 

The figures released by the Insolvency Service today reveal that there were 115,299 individuals entering either bankruptcy (16,582), a debt relief order (27,683) or an individual voluntary arrangement or IVA (71,034) in 2018, the highest annual total since 2011. 

The number of people entering personal insolvency in Q4 (October to December 2018) has risen by 32.7 per cent compared to the same period in 2017 and by 35.6 per cent when compared to the previous quarter. 

The statistics show that 1 in 401 adults became insolvent in 2018, up from 1 in 466 in 2017. 

Alec Pillmoor, Personal Insolvency Partner at RSM said:

‘The increase in personal insolvencies, up 36 per cent in the quarter to December, suggests that the effects of the 0.25 per cent base rate increase, as implemented by the BoE in August 2018, began to bite in the final quarter and individuals defined as just-about-managing felt the pinch. 

‘The annual increase in bankruptcies appears to have been fuelled by a sharp 15 per cent year on year rise in creditor led petitions. It is possible therefore that creditors have renewed a robust stance on debt collection prompting debtors to take responsibility for their finances and avoid bankruptcy.

‘This would explain why the rise in personal insolvencies in the year is underpinned by a record number of IVAs (both in terms of annual and quarterly numbers), suggesting that more and more people are recognising their financial vulnerability and taking steps to alleviate their debts and financial worries over a five-year period within an IVA.’

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