2017 saw UK insolvencies hit the highest level seen since the aftermath of the global financial crisis in 2008 according to the latest official figures released.
The Insolvency Service have revealed that 99,196 people were declared insolvent in 2017, representing a 9.4 per cent increase on the 2016 and only marginally below the peak figures recorded during the recession.
Individual Voluntary Arrangements (IVAs) – where individuals reschedule their debts and agree to much lower payments – hit a record high of 59,220 in 2017, up nearly 20 per cent on the year before.
The Insolvency Service confirmed that one in 467 UK adults became insolvent in 2017, representing 0.21 per cent of the adult population, up from one in 507 the year before.
A slight improvement was seen in the last quarter of 2017, with individual insolvencies decreasing by 0.2 per cent compared with the previous quarter, and IVAs falling by 0.9 per cent from the previous three months. However, the three highest quarterly levels of IVAs since their introduction in 1987 were all recorded in 2017.
R3, the trade body for insolvency practitioners, said that while the official figures are worrying, the real extent of debt problems in the UK could be even worse.
R3?s Duncan Swift said: ‘With personal insolvencies it?s always worth noting that the official statistics don?t tell the full story: there is a lot of ?hidden? insolvency out there.’
He continued: ‘There are potentially tens of thousands of people in non-statutory debt management plans. Although these plans are regulated by the FCA, there is no record of exactly how many there are. This makes it impossible to grasp the full scale of serious indebtedness.’
The rise in personal insolvencies is particularly unusual as it comes in a time of rising employment rather rising unemployment, indicating that working adults are now struggling financially despite being employed.
It has been predicted that if interest rates continue to rise during 2018 more households may fall into financial difficulty.