Personal Insolvencies at a record low

Statistics released yesterday have revealed that personal insolvencies are at their lowest level since 2005.

The official figures released by the Insolvency Service show a 1.8% decrease in individual insolvencies in 2014 when compared with 2013. With regards to bankruptcy orders, these were down by 17.3% and Debt Relief Orders also saw a decrease of 3.1%.

One reason for the drop in insolvencies could be due to the increase in Individual Voluntary Arrangements (IVA’s), which were up 6.8% on 2013’s annual total. This suggests that creditors have greater confidence in debtors abilities to get back on track, preferring to resolve credit issues through informal repayment plans as opposed to the formal insolvency procedure.

Another reason for the dip could be the sustained low interest rates we have seen over the past few years, making it easier for those with debts to be able to repay the principal amount gradually. However, as the economy starts to strengthen, interest rates will begin to rise and so consumers and businesses alike should keep this in mind when considering obtaining further credit.

For advice and assistance with any personal insolvency issues, please contact Pauline Rigby in the Business Law Department on 0800 037 4628 or send us an enquiry via our contact form.

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