Every quarter the Insolvency Service produce statistics which confirm how many businesses fail, broken down by insolvency type:, liquidations (whether they are compulsory or voluntary) administration or company voluntary arrangements (CVAs).
At the same time similar statistics are released for individuals, divided into bankruptcies, debt relief orders or individual voluntary arrangements (IVAs). There are very few details about the number of debt management plans.
When these are released, the details will always make that day’s news and as is normal with the media they focus on the worst points.
In general terms, corporate insolvency appointments have been failing from their recent highs reached during the financial crash in 2007/08 (although failures were much higher in the early 1990’s). Personal insolvency appointments have also been falling, although in the last year there has seen a steady rise. Historically men have always had higher rates of insolvency than women but since 2014, women have overtaken men.
Once a year the Insolvency Service produce more detailed personal insolvency statistics. The main headlines are:
- The total insolvency rate increased for the first time since 2009, and increased in all regions of England and Wales between 2015 and 2016.
- The North East continued to have the highest insolvency rates, while London had the lowest.
- Nine out of ten local authorities with the lowest insolvency rates were in London or the South East, whilst seven out of the ten areas with the highest rates were located in coastal areas.
- Insolvency rates increased for all age groups except 55 and over, with those aged between 18-44 showed the biggest rises.
When I review these figures I am always interested in the details. For example Corby has been in the top 10 of the worst local authority areas in terms of personal insolvency rates. As mentioned above the majority are seaside towns which have their own issues due to the seasonal economies in which they operate. Being based in Northampton we are aware that Corby still has elements of poor families struggling to make ends meet in low paid jobs. In our experience these will often be cases in which credits cards and loans have been built up, possibly in a period when there has been a loss of income or ill health or just simple overspending. Commonly once the debt has been built up they find it almost impossible to repay the debt because of the low income and so a downward spiral begins.
So what can the individual do?
The first thing required is to be honest with yourself and the situation. Sit down and summarise who you owe money to and how much. Next produce a budget detailing your income and necessary spending. Hopefully this should leave a surplus and you can then plan how to reduce your debt using this surplus.
You may find you need additional help and PBC have always offered help to individuals and will outline all the options open to them from refinancing, a debt management plan, IVA’s and bankruptcy, alone with many others. Our advice is simple: take action as soon as possible rather than leaving it too late.
Initial meeting are free of charge and confidential. We hope to understand your position, answer your questions and lay out the options available to you in order for you to consider which is the best way forward for you.