The number of individual insolvencies in the first three months of 2017 is the highest since mid-2014, according to new stats from the Insolvency Service.
Personal insolvencies in January to March were up nearly 7% since the last three months of 2016. The reason for this was a sharp rise in IVAs – these increased by more than 12%.
And what’s more, insolvencies didn’t just rise over the last quarter – they increased on the last 12 months too. Since this time last year, individual insolvencies rose by almost 16%. These new stats show that the number of people taking out IVAs has been rising fairly steadily since Q1 2015.
|Type of insolvency||Total numbers in Q1 2017||Change since Q4 2016|
|Debt Relief Orders (DROs)||6,119||2.0% ↓|
|Total insolvencies||24,531||6.7% ↑|
Source: The Insolvency Service
DROs fall, bankruptcies remain steady
While IVAs remained strong, the number of DROs continued to decrease. They fell 2% since the previous quarter, marking the third successive quarter they’ve dropped. Looking at the picture for the last year, DROs are down 9% since this time 12 months ago. This puts them at their lowest level since the changes to the eligibility criteria in October 2015.
Bankruptcies were slightly up, growing by just over 1%. Over the last 12 months, they’ve risen by nearly 4%. The main reason for this is due to the change in how people can apply for bankruptcy.
In April 2016, an online Bankruptcy Application came in for debtors in England and Wales. This made it easier to apply to go bankrupt, as people no longer have to go to court. And people can now also pay the bankruptcy fee in instalments, making this more accessible to some debtors.
Individual insolvencies are still well below the level they were at in 2009, just after the financial crisis. However, the stats do seem to show that the economy is starting to make things difficult for more people. At the start of the year, the UK economy grew by just 0.3% – this might be due to the current rate of inflation.