Personal insolvencies hit highest level for seven years

There were a total of 115,229 personal insolvencies over the course of 2018, the authority said, primarily driven by increases in individual voluntary arrangements (IVAs) which reached their highest annual total on record. In the 12 months ending Q4 2018, the rate of insolvency was 1 in 401 adults.

There were 34,108 individual insolvencies in Q4 2018, an increase of 34.8 percent on Q3. IVAs increased sharply, to a record level of 22,717 during Q4, an increase of 60.5 percent on Q3.

There were 27,683 debt relief orders in 2018, which was an increase of 11.2 percent compared on 2017.

Richard Haymes, head of financial difficulties at TDX Group, said: “We expect insolvencies to remain at this high rate throughout 2019 and 2020, fuelled by high consumer lending and the forceful marketing of companies offering personal insolvency as a debt management solution.

“Research we’ve conducted reveals major misperceptions around the consequences of personal insolvency. Nearly three in ten people don’t realise that entering personal insolvency could affect their access to rental accommodation, over a quarter (26 percent) of people don’t know it may affect their eligibility for a bank account, and nearly one in five (19 percent) Brits think it wouldn’t influence their ability to access a mortgage.”

On the business front, the statistics showed that the underlying number of company insolvencies increased in 2018 to 16,090, the highest level since 2014 and a 10 percent increase on 2017.

All types of company insolvency increased in 2018 compared with 2017 except administrative receivership.

Stuart Frith, President of insolvency and restructuring trade body R3, said: “The pressure point for businesses most frequently cited by our members is weak consumer demand. People just don’t have much spare cash at the moment, reflected in the rise in the number of personal insolvencies also confirmed today.

“Although recent government figures showed that the weekly amount spent by households has hit its highest level since 2005, much of that expenditure went on housing and transport, with less left over for consumer outlay. This is having a big impact on consumer-facing businesses, such as retailers and the restaurant sector.

“This also spells bad news for businesses at one remove from the consumer, such as manufacturers supplying consumer products, shop fitters, or logistics firms. Every business is part of a network and one struggling business will affect others.”