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2012 will show lowest insolvencies for four years 30 October 2012

RSM Tenon has today released statistics showing that personal insolvencies are continuing to decline.

The firm predicts that this year will have the lowest level of personal insolvencies for the past four years.

The figures show that personal insolvencies hit 82,000 in the first three quarters of 2012 whereas in 2011 the level was 91,000, a drop of nearly 10 per cent.

In this quarter, only 25,600 people became insolvent, a drop of 6 per cent on the previous quarter. The reasons for the levels decreasing at this accelerated rate can be due to the low interest rates and high employment rates (albeit there are record numbers of part-time workers many of whom will be feeling the squeeze).

When reviewing the personal insolvency solutions against the figures for the year to date, both Individual Voluntary Arrangements and Bankruptcies have both reduced compared to the same period in 2011, a decline of 7 per cent and 25 per cent respectively. Debt Relief Orders, an insolvency solution for people with low levels of debt, actually increased by 8 per cent from 21,650 in 2011 to 23,496 in 2012.

Mark Sands, RSM Tenon’s head of personal insolvency said: “The fact that IVAs have had the biggest drop since quarter 1 in 2008 shows that there is falling confidence in the level of future incomes which underpin most IVAs, so people may be staying in Debt Management Plans or could actually be ignoring their financial debt problems until they can see a future.

“This could mean we find that levels of personal insolvencies could actually explode in the next few years when people reach the point when they just cannot go on and have to face their spiraling debts and the inevitable interest rates rises.”

When reviewing the age of people who are becoming insolvent, 30 per cent in 2012 year to date are in the 36-45 age group. This group accounts for 31 per cent of bankruptcies, 23 per cent of Debt Relief Orders and 34 per cent of IVAs.

The only age group which is higher is the 26-35 age group for Debt Relief Orders which might be the result of younger people researching into managing debt earlier and putting a strategy in place before their financial position becomes much worse. Bankruptcies of men aged 66 and over had the biggest quarter on quarter increase, up 13%.

Finally, the regions with the largest number of personal insolvencies when reviewing the figures as a whole this year are North West (14 per cent), South East (13 per cent) and South West (12 per cent).

 

 

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