The latest insolvency statistics tell an interesting story. 2017 was predicted to be a volatile year and if you scratch the surface, there has not yet been significant movement in either corporate or personal insolvency numbers. Although the headlines will identify that both have risen, looking a little deeper reveals that the corporate numbers have been driven upwards by an isolated event and personal insolvencies have been boosted by record levels of Individual Voluntary Arrangements (IVAs). There has to be a question mark over whether those in the IVA process have found themselves there by virtue of best advice and therefore whether the numbers are artificially inflated.
It is interesting to note that, in amongst the total personal insolvencies, women now represent the majority overall, with bankruptcies remaining the only male-dominated process. Debt Relief Orders in particular are heavily dominated by women and also a majority of individuals in a DRO now are unemployed. This confirms that the process is achieving its intended purpose for vulnerable people, previously caught in a debt spiral, now being able to use the DRO effectively as a cost effective route out of indebtedness.
Creditors’ bankruptcy petitions are still at their lowest levels when compared to individuals using the online process to put themselves into bankruptcy. Many believed that the £5,000 limit for a creditor’s petition was a step too far and it will take a few years yet for that threshold to align with unpaid debts such as Council Tax.