Personal insolvencies fall to 10-year low

Δημοσιεύθηκε: 1 Μαΐου 2015 - 16:42

The number of personal insolvencies dropped to its lowest level since 2005 in the first three months of 2015.

The third successive quarterly fall in insolvencies in England and Wales brought the total number to 20,826, which was 18.6 per cent lower than in the same period in 2014.

Declines were shown in bankruptcy, individual voluntary arrangements (IVAs) and debt relief orders in figures released this week by the Insolvency Service, a government agency. The agency tracks the three main forms of insolvency but not more informal ways for people to pay down their debts, such as debt management plans.

Bankruptcies, the most drastic form of insolvency, were down by 22.5 per cent compared to the first three months of 2014.

Phillip Sykes, president of R3, the insolvency practitioner body, said record low inflation, which dropped to zero per cent in February and March as measured by the consumer prices index, would help relieve some pressure on those living at the edge of their means.

He also highlighted the sharp fall in IVAs. "It may be too early to draw conclusions but demand could be falling as a result of low interest rates, low inflation and tighter regulation. This trend is worth watching."

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Mark Sands, partner at accountants Baker Tilly, said tighter lending after the financial crisis was one of the factors behind the drop in insolvency, since fewer people were left in serious financial difficulty. "As well as this, we are seeing lower levels of personal debt and fewer people borrowing outside of their means due to more stringent affordability checks by creditors."

New lending was starting to rise amid growing economic confidence, he added. "Although it is looking likely that the 2015 will see the lowest level of personal insolvencies in ten years, we could start to see numbers creeping up in the coming years."

Some have drawn attention to the patchy regional picture in insolvency. Analysis published last by accountancy firm Moore Stephens found falling insolvency rates in London and the Southeast, against rising levels of insolvency in the Northeast and Northwest.

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