Personal insolvencies rise in fourth quarter of 2017

Nearly 25,000 individuals entered into personal insolvency processes in the final three months of 2017, according to new figures.

Estimates from consulting firm RSM suggest that personal insolvencies have increased by nearly 7% year-on-year.

Figures from the Insolvency Service, released on 26 January, are expected to reveal that around 24,500 people saw their finances deteriorate drastically in late 2017.

Official figures show that more than 74,000 people entered personal insolvency in the first nine months of the year across England and Wales.

For comparison, 90,657 personal insolvencies were recorded in 2016, while the latest estimates push that figure closer to 100,000 people for 2017.

Should that be the case, it would represent the highest level of personal insolvency since 2014.

RSM use a Tracker to predict insolvency rates and expect there to be 14,500 individual voluntary arrangements from the fourth quarter, as well as 3,600 bankruptcies and 6,400 debt relief orders.

Despite improving employment rates and creditors providing more time to debtors to settle arrears, personal insolvencies still rose.

Rising interest rates, wages that have dropped behind inflation and an increase in household borrowing have all influenced the figures.

It is suggested that four in five of the insolvency cases result from debtor petitions when all other avenues are exhausted.

For individuals struggling with their finances, seeking appropriate support is vital, as a range of debt relief solutions could be available.

Declaring bankruptcy is just one option, as other debt management solutions could help to ease the financial pressures being faced.

Given that a lot of small business lending is supported by personal guarantees from directors or shareholders, issues can easily arise if things go wrong.

In such instances, it may be necessary to turn to those directors or shareholders to recover the company's debts which is a difficult situation for all concerned.

However, with the right advice and strategy it should be possible to recover the needed funds without incurring too much risk.

By Phil Smith


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