Personal insolvencies reach seven-year high
There were 115,299 personal insolvencies in England and Wales last year, a 16.2% rise on 2017 and the highest annual level since 2011, statistics from the Insolvency Service reveal.
This was primarily driven by increases in individual voluntary arrangements (IVAs) which reached their highest annual total on record. There were 71,034 IVAs in 2018, an increase of 19.9% on 2017.
Bankruptcies also went up by 9.8% to 16,582.
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 by TDX Group found widespread confusion over the consequences of personal insolvency.
Nearly three in ten people polled did not realise that entering personal insolvency could affect their access to rental accommodation, while over a quarter (26%) of people didn’t know it may affect their eligibility for a bank account. Nearly one in five (19%) incorrectly thought it wouldn’t influence their ability to access a mortgage.
Types of insolvency explained
This is a form of debt relief available for anyone who can’t pay their debts. Assets owned are sold and the proceeds distributed to creditors. You could end up having to sell your home or car.
Debt relief orders (DROs)
These are a form of debt relief available to those who have a low income, low assets and less than £20,000 of debt. If your DRO is approved, your debt payments are put on hold for 12 months. If after the 12 months your circumstances haven’t improved, your debts are written off.
Individual voluntary arrangements (IVAs)
These are voluntary way of repaying creditors some or all of what they are owed. Once approved by 75% or more of creditors, the arrangement is binding on all. IVAs are supervised by licensed Insolvency Practitioners. All individuals entering these procedures are listed on the Individual Insolvency Register, and remain on the list until three months after their insolvency ends.