As you may know the most recent personal and corporate insolvency statistics for Q3 2013 were published on 1st November.
The figures highlight a decrease in corporate insolvency numbers but revealed a surprise increase in the number of voluntary arrangements, up more than 10% from the previous quarter.
The Insolvency Services figures show that 13,394 people entered into individual voluntary arrangements in 2013 Q3, the highest quarterly figure since spring 2010.
The boom in the level of individual voluntary arrangements (IVAs) could have occurred due to a number of factors, however is likely that we are seeing the continued high cost of living contribute massively to the financial burdens of many people as they struggle to cover day to day costs as well as make payments against their debts.
Decreases in the number of more drastic debt relief options like bankruptcies and debt relief orders (DROs) are to be expected where we see a leap in IVA numbers. Many may find that they cannot afford the fees to enter bankruptcy, or they have too much debt or too many assets to qualify for a DRO or perhaps just find that an IVA is less drastic and more suited to their needs and circumstances.
Phillip Sykes, deputy vice-president of insolvency trade body R3, commented on the figures:
“Ordinarily, most people will use a recession and recovery to pay down debts, and record low interest rates should be helping with that.”
“However, our Personal Debt Snapshots have found that the rising cost of living has been a major concern over the past year for those that struggle to payday, while optimism about personal finances remains low. Although the economy is returning to growth, some people may be left behind.”
Of the decrease in corporate insolvency figures, Mr Sykes said:
“The decrease in corporate insolvencies is slightly surprising. Economic recovery usually heralds an increase in insolvencies.”
“Although we’ve heard reports of creditor pressure increasing, businesses may also be receiving a helping hand from their employees. Employees making sacrifices to keep their employer afloat was not uncommon during the depths of the recession, and, as the recent Grangemouth story showed, this phenomenon may still be going on.”
“It may take a little while for the recent economic growth to have an impact on insolvency figures: growth over the past year has been solid rather than spectacular. Meanwhile interest rates remain low, which will continue to give struggling businesses a helping hand.”
“While corporate insolvencies increased in Q2, one-off quarterly increases have not been unheard of in the past few years.”
If you have noticed any signs of insolvency in your personal or corporate clients then we can help with expert impartial advice and solutions, the earlier financial problems are tackled, the more options there are available to put them right again. Get in touch today.