Personal insolvency

In February 2017, PCR reported on the significant rise in personal insolvencies, with a gargantuan 90,930 personal insolvencies being recorded in 2016. Not only were the results alarming, but they were also the highest recorded since 2010.

We cited several reasons as to why the figures were so high, most notably with individuals taking advantage of the cheap credit available to them and the low interest rates, seeing a plethora of households inadvertently over-stretch themselves. Furthermore, a report published by the Money Advice Service in 2016 highlighted young adults, single parents those renting their homes or part of a larger family as those most likely to be affected by severe debt.

Two years on, and the Insolvency Service published results early this year which revealed that the number of people in England and Wales going insolvent has seen its biggest increase in seven years. The total number of insolvencies in 2018 had risen to 115,299, a 16.2% rise on 2017. The most conspicuous element of the findings was that there was a record increase in the amount of Individual Voluntary Arrangements (IVAs) taken out, with a reported 71,034 – an increase of almost 20% on 2017. Its ever-growing popularity has been due to the fact that it allows an individual to protect their main assets and to avoid full-blown bankruptcy.

However, its popularity has also been questioned with the Insolvency Service conducting a report which highlighted that several people had been mis-sold IVAs by debt firms, with many being offered poor advice. One of the biggest issues is that people in debt could have potentially entered an IVA when other options would have been more appropriate. The report by the Insolvency Service also questioned why certain fees had been charged and warned that some customers were even being mis-sold finance products once they had agreed to take out an IVA. Perhaps most worryingly as well is that those in debt where being offered “early-exit” loans which actually cost more than an IVA in the long term. Currently, there is no refund process for anyone who has been mis-sold an IVA, although the Insolvency Service is now working closely with professional bodies to fix some of the issues raised in the report.

It is also important to realise that there is a lot of money to be made by firms for selling IVAs, hence why it is heavily advertised. It is not unusual therefore to see many firms offering IVAs, even though it may not necessarily be within the best interests of an individual.

The graph below shows the number of insolvencies recorded over the past 10 years with 2018 seeing the biggest number of insolvencies recorded since 2011.

number of insolvencies graph
Source: Insolvency Service

Nonetheless, the news that the highest figures recorded in personal insolvency in seven years is also not likely to bode well with Brexit cynics who will point to this as another sign of vulnerability in the UK’s consumer economy, especially coming just over a month before the UK is scheduled to leave the European Union. The consensus is that people just do not have much disposable income now, which coincidently is fuelled further by the fact that British shoppers cut back on spending in the three months to December for the first time since last spring.

Perhaps the doom and gloom surrounding the UK high street will also continue to grow in 2019, with 2018 seeing several retailers go into administration or going into a Company Voluntary Arrangement (CVA).

How PCR can help

The most important aspect to consider in all of this though is that should you find yourself struggling with considerable debt, there are many options available for you to take. PCR can assist by reviewing your financial situation and can advise you on the best course of action to take. Similarly, if you have been mis-sold an IVA, you can speak to one of our Insolvency Practitioners who will advise you on the best course of action to take next. For advice, please contact our PCR Head Office on 0208 841 5252 or alternatively, you can email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

You can also contact us on the above regarding any insolvency procedures in general to arrange a FREE initial consultation with one of our Insolvency Practitioners. Furthermore, you can contact us on our Priority Contact Form, where we will look to get back to you as soon as possible.

Ahmed Ali
Practice Development Executive 

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