The Insolvency Service recently revealed figures which showed a huge increase in the levels of personal insolvency. In fact it is the sharpest increase for over 5 years.
The bare facts are that over 27,000 people became insolvent in the period April to June 2014; which is over 5% up on the corresponding period the previous year. The rate of insolvency was on the increase for the first time in 4 years with one in over 400 people declaring themselves insolvent.
Individual Voluntary Arrangements (IVAs) have increased markedly. There has been over a 20% rise in IVAs for the same period. In April to June 2014 there were nearly 15,000 IVAs which is the largest total on record since IVAs were established nearly 30 years ago.
The fact that IVAs have increased, together with the prospect of an increase in interests rates would mean more people could become insolvent as they would have less money available for living expenses following increased mortgage payments.
The figures released by The Insolvency Service show however that companies are in a far stronger position. Company insolvencies have decreased across the board; including Liquidations, Administrations and Company Voluntary Liquidation (CVLs). This would seem to tie in with the fact that the British economy is now firmly on an upturn.
What needs to happen now is for this prosperity to be spread to the wider public. Once people have surplus income then they are far less likely to consider themselves insolvent. Most importantly, house price inflation has meant that people to date are not experiencing the benefits of any pickup in the British economy and are still suffering from what Labour have dubbed ‘the cost of living crisis’.
The Chief Executive of The Insolvency Service, Graham Horne, has commented:
“Today’s figures show that more people have become insolvent than last year. There are a number of ways to manage debts over time and it is important that people who need help should seek advice early”.
Farleys Solicitors would reiterate the comments of Graham Horne, and if there is one piece of advice that should be given to someone with debt or facing potential insolvency is to seek good independent debt advice as soon as possible.
As a Personal Insolvency Solicitor I provide debt advice free of charge and am able to guide you through all of the options available. For a confidential discussion, please call 01254 606090 or alternatively, you can email me.