A total of 27,388 people became insolvent in the first three months of 2018, official figures from the Insolvency Service show.
The 6.8 percent rise on the previous quarter was driven primarily by an increase in individual voluntary arrangements, which reached a record high, while the number of bankruptcies and debt relief orders also increased.
The total figure comprised 4,188 bankruptcies (15 percent of total insolvencies), 6,524 debt relief orders (DROs, 24 percent), and 16,676 individual voluntary arrangements (IVAs, 61 percent).
Richard Haymes, head of financial difficulties at TDX Group, said: “One of the main drivers of this growth, along with increases in consumer borrowing, is the contraction of the debt management sector due to some large providers entering administration, and tighter Financial Conduct Authority (FCA) regulation.
“As providers of debt management services exit the industry, insolvency service providers are stepping in to fill the void. Some of these companies use persuasive online marketing via Facebook and other social media platforms to target those suffering from financial stress.”
Meanwhile, underlying corporate insolvencies rose by 13 percent in Q1 compared to Q4 2017, and rose slightly by 0.6 percent compared to Q1 2017.
A total of 4,462 companies entered insolvency in Q1 2018, consisting of 3,209 creditors’ voluntary liquidations (CVLs, 72 percent of all insolvencies), 783 compulsory liquidations (17.5 percent) and 470 other insolvencies (11.5 percent).