Bankruptcies hit six-year high.

29/1/2019.

Bankruptcies hit six-year high.  The number of people going bust has jumped to at least a six-year high, according to new figures from the Insolvency Service. Insolvency specialists RSM expect the figures will show more than 109,000 insolvency cases took place across the whole of last year.

The numbers hit their high in the three months to June as  high inflation, low wage rises and benefit cuts hit the finances of those living on a financial knife edge.

Individual insolvencies numbered 28,951 in the second quarter, a hike of 4.4% on the previous quarter and 27.3% on the same period last year.

Household debt in UK is worst on record

The Governments Insolvency Service said it was clear the trend had been rising steadily since 2015 to reach the highest quarterly total since the first quarter of 2012.

It said the rise was driven by a record number of people taking out individual voluntary arrangements (IVAs).

Although unemployment is historically low, so are wages levels and many people are employed in the gig economy, with irregular earnings which can make financial planning difficult.

At the same time  consumer credit volumes have been growing, as has the average amount of debt per head.

Earlier this week the Office for National Statistics  (ONS) showed that last year Britons spent more than they earned for the first time since 1988. Researchers at the ONS found that British households spent around £900 more on average than they received in income during 2017, with those on low incomes the most likely to borrow in an effort to make ends meet.

Should interest rates rise,  people struggling to pay bills and living on credit will face a difficult future.

And many analysts are predicting the Bank of England is about to raise interest rates  to combat inflation.

Personal insolvencies fall into three main categories – bankruptcies, IVAs and debt relief orders (DROs) – but exclude the thousands of debt management plans people agree with their banks.

The Insolvency Service said 62% of personal insolvencies in the second quarter of 2018 were IVAs, 24% were DROs and 14% were bankruptcies.

There were 17,987 IVAs, up 5.7% on the first quarter,  the largest quarterly number of IVAs since they were introduced in 1987.

Meanwhile company insolvencies in England and Wales dropped from their peak in the second quarter last year.

3,918 companies went insolvent in the second quarter of 2018, consisting of 2,731 creditors’ voluntary liquidations, 752 compulsory liquidations and 435 other insolvencies.

How can CPA help?

At the Credit Protection Association, we have been collecting debt for over 100 years.

As a third party collector, we can get your payments prioritised over those who are not as hot on collections.

When you customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of the pile and get your invoice paid.

Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, we can help take the worry out of trading on credit.

Most businesses try and do their own credit management, our members entrust it to the professionals, freeing themselves up to concentrate on their business and trade with confidence.

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