RSM is predicting that overall personal insolvency levels in the second quarter will rise by around 15 per cent versus the last quarter, due largely to a rise in the number of people entering Individual Voluntary Arrangements (IVAs).
Ahead of official figures published by the Insolvency Service on 28 July, the data from Tracker, RSM’s online early warning system, suggests that there were around 22,500 personal insolvencies in England and Wales in the second quarter of 2016, comprising 3,750 bankruptcies, 6,750 Debt Relief Orders (DROs) and 12,000 IVAs. While bankruptcies and DROs remained fairly flat versus the previous quarter, IVAs are expected to have risen by over 30 per cent.
An Individual Voluntary Arrangement (IVA) enables debtors to enter an agreement with their creditors to pay all or part of their debts. Debtors agree to make regular payments to an insolvency practitioner, who then divides the money between creditors.
Robert Beat, personal insolvency partner at RSM said:
‘While bankruptcies and Debt Relief Orders have remained relatively flat over the last quarter, there appears to have been a spike in the number of people entering into IVAs as a means of dealing with problem debts. Quite why this is the case isn’t clear, but debt advisers may have been signposting more people towards IVAs rather than towards more informal debt management plans because of a compliance clampdown by the regulator.
‘Our figures also show that there were more women than men entering some kind of insolvency procedure in the first half of this year, continuing a trend we have seen since 2014. Overall, women accounted for 54 per cent of all insolvency cases in the first half of the year, although the proportion was far higher for Debt Relief Orders where women accounted for 65 per cent of cases. Men, on the other hand, accounted for 62 per cent of bankruptcy cases, which may indicate that men have a tendency to bury their head in the sand when it comes to problem debts, rather than dealing with them at an earlier stage.’