Despite more favourable economic conditions, the latest statistics from the Government’s Insolvency Service have shown that the number of people who become formally insolvent between April and June 2016 has increased by 6.9% on the previous quarter and has risen by 22.4% on the same quarter in 2015.
This was partly driven by a big increase in the number of people entering Individual Voluntary Arrangements (IVAs) which allow debt to be rescheduled, with lower repayments, and there is the possibility of some debt being written off at the end of the arrangement. The number of IVAs in the three-month period was 12,225, which was 15.4% higher than the previous quarter and a massive 42.7% higher than the same period last year.
The number of Debt Relief Orders (DROs) which allow those with less than £20,000 of debts to effectively write off the debt completely, also increased slightly on the previous three months and was 15.6% higher than the same period in 2015. There were 6,741 DROs in England and Wales between April and June 2016.
The one area of improvement was a decrease of 5.4% in bankruptcies in the period compared to the last quarter, with 3,537 people being declared bankrupt. This was also 11.2% lower than the same period in 2015.
So whilst the overall number of insolvencies has increased, most of the increase can be put down to people seeking to address their debts using IVAs, which allows an affordable amount of the debt to be repaid whilst the unaffordable portion is written off. This allows people to avoid bankruptcy, which may have a much more significant impact on them than an IVA.
If you are struggling with personal debt, whether it is credit card and personal loans, or the overhang from a struggling business venture, give us a call to discuss your options. Call us today on 01709 331300.