Insolvencies on the rise.
31/10/2017.
A record number of individuals are finding themselves in financial difficulty and unable to pay their debts, according to new data.
Figures from the Insolvency Service have put insolvencies 11% higher than at the start of the year. Furthermore, the numbers of Individual Voluntary Agreements (IVA) have reached an all time high at 15,523.
An IVA is set up when a consumer agrees, via an insolvency practitioner, to pay back their part or all of their debt over a negotiated period of time, in order to avoid bankruptcy.
Adrian Hyde, president of R3, the UK’s insolvency body, said that these figures were the result of “falling wages and exhausted credit limits”.
The numbers of financially troubled households are predicted to rise again in 2018, particularly those who are surviving on credit or low income. Alec Pillmoor from RSM fears what the proposed rise in interest rates will have on these vulnerable households.
Higher interest rates could also affect our businesses, with so called “zombie firms” struggling further. These uncompetitive companies who are currently just about managing to survive, could even find themselves killed off altogether.
Corporate insolvencies rose by 15% on the previous three months, and there are signs that more businesses are facing financial difficulties
The market for corporate insolvency is “ominously quiet”, Bob Pinder, regional director at the Institute of Chartered Accountants in England said, and fears a new wave of insolvencies could be triggered if interest rates rise.
James Salmon for the Credit Protection Association said that any rise in insolvencies for individuals or companies will be off concern to those who sell their goods and services on credit. It underlines the importance of regular credit checking and promptly chasing payment as soon as it becomes due.
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
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