For the third successive year, personal insolvencies are up. In 2018, the number of people entering into insolvency in the UK rose to 155,229, an increase of 16%, and the highest since 2011.
This spike in the number of personal insolvencies can largely be attributed to a record number of IVAs. Though Bankruptcies and Debt Relief Orders have also increased by 9.8% and 11.2% respectively, the number of Individual Voluntary Arrangements (IVAs) jumped by almost 20% in the last 12 months, to 71,034.
High inflation, benefit cuts and stagnant wage growth have all contributed to consumer over-indebtedness, and the adoption of tighter credit standards in the banking industry has led to many household budgets becoming more susceptible to shock. IVAs are less comprehensive than a full bankruptcy and enable the protection of certain assets, but not without consequence. Entering into an IVA can affect credit ratings, rental agreements, utility supply and bank accounts, and there is concern by many that there are misconceptions regarding the ramifications of personal insolvency.
Michael Ellis, Senior Executive in Healys Insolvency team, comments:
“This increase in the number of personal insolvencies now means that approximately 1 in 400 adults in the UK are insolvent, and that Individual Voluntary Arrangements are now the most prevalent form entered into. IVAs carry less stigma than bankruptcies and allow you to come to an arrangement with creditors without necessarily losing your home; but there are consequences, and an IVA may not be suitable or necessary for all. Any decision relating to personal insolvency should not be taken lightly, but should be made with the help of a qualified Insolvency practitioner who can offer appropriate guidance and advice based on your individual circumstances.”
If you need advice and would like to talk to a member of our Insolvency team, please contact us on 0207 822 4000 or email email@example.com