According to the latest figures from the Insolvency Service, there were 24,282 individual insolvencies in England and Wales in the last quarter of 2013 – highlighting a decrease of 4.6 percent in comparison to the same period in 2012.
This figure consists of 5,386 bankruptcies (which were down 22.2 percent on the corresponding quarter of the previous year), 6,563 Debt Relief Orders (down 13.1 percent over the same period) and 12,333 Individual Voluntary Arrangements (up 12.3 percent over the same period).
In total, there were 101,049 individual insolvencies in 2013 – the lowest level since 2005. Surely this is good news?
Commenting on the figures, Vice-president of R3, the Association of Business Recovery Professionals said: that the latest personal insolvency figures might only represent the “tip of the iceberg”. He is worried that many people will have done their best to avoid insolvency in the run-up to Christmas and this is going to see them struggle in January and February.
It will be interesting to see how these figures change in the next quarterly reporting of statistics. I believe that there is a general trend of the economy getting better but it is very fragile and will be very sensitive to any upwards change in the base rate.
The Vice-president of R3 said; “Consumers traditionally overspend over the festive period and unless they have a solid plan in place for dealing with this situation, they can find themselves with a debt hangover.”
Is this really a sign that the UK as a whole is becoming more responsible with their finances as they try to avoid going into the red? I believe that most of the cases we are now dealing with are ones that have had historical problems for the last four or five years and they cannot keep going any longer.
Individual Voluntary Arrangements remain the most popular debt relief with 12,333 taken out in the fourth quarter of 2013, which accounts for nearly 50 percent of all insolvencies. What this figure does not analyse is the split of businesses using IVA’s, such as sole traders and private individuals with bank loans and credit card debts.
There has also been a rise in the number of self-employed individuals seeking bankruptcies, with this sector accounting for 24.4 percent in the third quarter of 2013. This is an area that my colleague and I at Kirks Insolvency have been watching with interest. In the last quarter our experience shows that businesses are still under pressure from historical problems such as ‘time to pay’ agreements with HM Revenue and Customs that cannot be renewed. One good thing to note is that the banks continue to be lenient and are particularly supportive to those of their banking clients who have problems.
See Insolvency statistics at: http://www.insolvencydirect.bis.gov.uk/otherinformation/statistics/201402/index.htm
