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Individual insolvencies fall to lowest level since 2005 29 January 2016

The number of individual insolvencies across the whole of 2015 fell 19 percent to 79,965 – their lowest annual level for a decade.

The Insolvency Service, which published the official statistics this morning (January 29), said the fifth successive annual decrease was driven by a fall in individual voluntary arrangements (IVAs) which were also at their lowest level since 2008.

The number of bankruptcies was the lowest for 25 years, a factor likely to be affected by the introduction of debt relief orders (DROs).

An increase in (DROs) in the fourth quarter of 2015, the Insolvency Service said, resulted from a change to the eligibility criteria.

The introduction of debt relief orders (DROs) in 2009 is likely to have affected the number of bankruptcies.

While there was a quarter-on-quarter increase in DROs, the annual total fell on 2014. There were 24,175 DROs in 2015, a nine percent decrease compared to 2014 and the lowest annual total since they were introduced in 2009.

Despite decreases all-round, some personal insolvency practitioners believe other figures are just as important.

Matthew Chadwick, head of personal insolvency (England & Wales) at accountancy firm BDO, said: “With household debt now at its highest level in four years and real earnings having grown by just 0.7 percent between January and November 2015, it is unsurprising that debt as a percentage of net household income has risen to over 55 percent.

“This situation is unlikely to change in the short term and there is every possibility that real earning increases could fall back into the negative this year. The outlook for many remains difficult.”

He added: “The impact of October’s seven-fold increase in the bankruptcy threshold level has yet to be felt, though could prompt a notable fall in insolvencies this coming year as the threshold alteration is dealt with in the courts.”

The Insolvency Service statistics show there were 39,993 IVAs in 2015, a 23 percent decrease on 2014, and the lowest annual total since 2008. This followed increases in the previous two years. IVAs comprised 50 percent of all individual insolvencies in 2015, compared with 53 percent in 2014.

There were a total of 15,797 bankruptcy orders in 2015, 22 percent lower than in 2014.

By Marcel LeGouais



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