The Debt Advisor Logo The Debt Advisor Logo
Request a callback
blog

PERSONAL INSOLVENCIES REACH HIGHEST NUMBERS SINCE 2014

Published on:May 3, 2017Author:Lucyna Rynkiewicz-Jones

Personal Insolvencies increased in the 1st quarter

Figures published on 28th April by the Insolvency Service show that there has been an increase in the overall number of individual insolvencies driven by the increase in Individual Voluntary Arrangements; this was the highest number of Individual Voluntary Arrangements since Q2 2014.

April Quarter Personal Insolvencies

Type of Procedure 4th quarter 2016 1st quarter 2017 Movement
Individual Voluntary Arrangement “IVA’s” 12,823 14,539 12.5%▲
Bankruptcies 3,786 3,873 1.3% ▲
Debt Relief Orders “DRO’s” 6,243 6,119 2.0% ▼
Total Numbers 22,852 24,531 6.7% ▲


Total Personal Insolvencies

Total Individual Insolvencies in Q1 2017 were 6.7% higher than in the previous quarter and 15.7% higher than the same quarter the previous year, continuing the increasing trend since 2015.

IVA’s

The number of IVA’s in Q1 2017 showed a 12.5% rise compared with Q4 2016 and a 35.2% increase on the same quarter in 2016. IVA numbers were the highest since Q2 2014.

DRO’s

Debt Relief Orders “DRO’s” or “mini Bankruptcies” had a quarter on quarter fall of 2%. There was also a decrease of 9% in comparison with the same quarter in 2016. This has been the lowest number of DRO’s since the change to eligibility criteria was brought into place in October 2015 meaning that DRO’s were available to those with debts of up to £20,000 (from £15,000) and £1,000 worth of assets (from £300).

Bankruptcies

Bankruptcies overall have risen by 1.3% this quarter and by 3.7% on the year. This is put mainly down to the changes to the application process for debtor bankruptcies which were bought into place in April 2016 and all applications are now submitted online rather than through the courts and it is therefore something that people find they can do themselves more easily than before.

There were 852 creditor petition bankruptcies in Q1 2017 which is a decrease of 11.1% than Q4 2016 and 20% lower than the same quarter in 2016. The year on year decrease is likely to be linked to a change in the minimum debt a creditor must be owed to make a person bankrupt which increased from £750 to £5,000 from 1st October 2015 and also the increase in costs to petition which were hiked from £825 to £990 in July 2016 plus the costs charged by the Official Receiver “OR” for Bankruptcies also materially increased with the first £8,775 of monies into the estate going to settle the OR costs.

April Quarter Corporate Insolvencies

The total number for company insolvencies has decreased in Q1 2017 compared with the previous quarter as detailed below.

Type of Procedure 1st quarter 2016 1st quarter 2017 Movement
Compulsory Liquidations 813 836 2.8%▲
Creditors Voluntary Liquidations “CVL’s” 2,555 2,693 5.4%▲
Administrations 316 357 13.0%▲
Company Voluntary Arrangements “CVA’s”  

 

84

 

 

81

3.6%▼
Receivership’s 0 0 N/A
Total Numbers 3,768 3,967 5.3%▲

Total company insolvencies have increased by 5.3% compared to Q1 2016. Businesses are facing more challenging trading conditions which include:-

  • A decline of 1.4% in consumer spending during the 1st quarter of 2017.
  • The decrease in the value of the £ in the last 12 months will have had a detrimental effect on importers and will push up the cost of goods particularly raw materials.
  • Introduction of the national living wage plus the costs of auto enrolment which will push up costs for all businesses and will be particularly hard for small to medium enterprises who are likely to have limited reserves, who face tough competition and struggle to pass on increased costs to their customers.

The number of corporate insolvencies are, however still low in comparison with the 1st quarter of 2009 which saw 6,724 businesses enter into formal insolvency.

The Brexit negotiations are also likely to increase uncertainty for both consumers and businesses. During times of financial uncertainty, it is natural for both to hold back on spending and this will unfortunately lead to an increase in businesses struggling to declining turnover and cash flow problems.

Fortunately we do have effective rescue solutions in England and Wales which can help your business survive. If you want to chat to one of our specialist business or personal advisors, please call the numbers below or email us at advice@thedebtadvisor.co.uk or use our contact form.

The Debt Advisor 0800 0851 825
The Business Debt Advisor 0800 7810 990

All debt solutions need to be carefully considered. IVA’s and CVA’s are formal solutions and failure to keep to the terms can result in the arrangement failing and bankruptcy or compulsory liquidation following.

For individuals there is also free debt help and advice available through a variety of debt charities. For more information, we recommend you visit www.moneyadviceservice.org.uk.

For businesses there is free debt help available, to find our more, we recommend you visit www.nationaldebtline.org

The Debt Advisor is authorised and regulated by The Financial Conduct Authority (reg no: 606669).