Personal insolvencies in England and Wales rose in the first quarter of 2018 to the highest level for over five years.
The latest figures released by the Insolvency Service confirmed that 27,388 personal insolvencies were registered during the first three months of this year, representing the highest quarterly figure since the third quarter of 2012.
Individual voluntary arrangements (IVAs) reached a record high of 16,676 during the period, whilst there were also 6,524 debt relief orders (DROs) and 4,188 bankruptcies.
IVAs are agreements whereby money owed is shared out between creditors. First introduced in 1987 they have steadily become more widely used and the Insolvency Service confirmed that the first three months of 2018 saw the highest quarterly number registered since inception.
DROs are aimed at people with less than ?20,000 of debt and no realistic prospect of paying it off, and bankruptcies now tend to be considered a ‘last resort’.
The quarterly personal insolvency figure represents a 6.8 per cent rise from the last quarter of 2017, and an 8.5 per cent increase when compared to the equivalent first quarter of last year.
Vice-president of insolvency and restructuring body R3, Duncan Swift, commented: ‘IVAs are typically associated with consumer debts. Given the pressures people’s personal budgets have been under, this is perhaps not a surprising result. Although wage rises are starting to outpace inflation again, this will have come too late for some who have gone a long time without a real pay rise.’
He continued: ‘The continued availability of cheap credit has made a build-up of consumer credit affordable for some, but not everyone is able to service their debt, even with such low interest rates.’
It is thought that the base interest rate rise by the Bank of England in November may have added further strain to many people’s finances, and with another rise expected soon consumers need to be careful with their borrowing.