Personal insolvencies reach highest annual level since 2010

The number of individuals entering a personal insolvency procedure in England and Wales has reduced slightly compared to the previous quarter, but the annual figure for the calendar year 2019 rose by 6 per cent versus the previous year, the highest level since 2010.

The figures, released by the Insolvency Service today, reveal that there were 29,262 individuals entering either bankruptcy (4,118), a debt relief order (6,947) or an individual voluntary arrangement or IVA (18,197) in the final quarter of 2019. 

Further, the statistics show that 1 in 381 adults entered a personal insolvency procedure in the rolling 12 months to the end of Quarter 4, being 31 December 2019, down from 1 in 365 adults in the rolling 12 months to the end of Quarter 3 (and comparable to the rolling rate of 1 in 382 at the close of Q2 2019). 

Alec Pillmoor, Personal Insolvency Partner at RSM said: 

'As we predicted, despite seeing a small drop in quarter on quarter personal insolvency numbers, the official statistics released by the Insolvency Service show that 2019 experienced the highest number of personal insolvencies in a calendar year in England and Wales since 2010 and a year on year increase of 6.0 per cent.’

'The official figures for Q4 show a decrease of 4.3 per cent in the levels of personal insolvencies when compared to the previous quarter and a similar decrease of 15.6 per cent compared to the same quarter last year.’

'We remain concerned at the steady rise in the proportion of personal insolvencies affecting the 18-25 age group. Our core data, extracted from Tracker, RSM's early online warning system, suggests that year on year, personal insolvencies within this demographic increased by 32 per cent. More alarmingly, the increase when compared to the 2016 calendar year, is estimated at a worrying 403 per cent.

'It is feasible that some within the 18-25 age group have limited financial experience or literacy and in the absence of sufficient education from schools or finance providers, it is difficult to see these trends slowing any time soon.

‘It should be noted that contrary to the plight of the 18-25-year olds, personal insolvency rates within the 56-65 and 66+ age groups are decreasing. Year on year rates are down 5 per cent and 11 per cent respectively when compared to the 2018 calendar year and more tellingly, rates have decreased by 14 per cent and 37 per cent respectively when compared to the calendar year of 2016.

‘With the growth of the cashless society, and with low interest rates providing access to easy money, consumers across the age range may be failing to monitor their spending and maintain a budget effectively. It is notable that at a time when wages are worth less than they were a decade ago, the average unsecured household debt is now £14,540 when compared to £10,723 a little over 10 years ago.’

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