Nearly 28,000 Brits enter insolvency as economic crunch hits
Almost 28,000 personal insolvencies were recorded over the past three months as Britons come under pressure from the soaring cost-of-living, according to official figures.
The Insolvency Service confirmed on Friday that it has also seen a rise in registrations from people seeking breathing space from debts.
The new data showed that 27,927 individual insolvencies were recorded over the three months to September.
This reflected a five per cent dip against the previous quarter, but was two per cent higher than the same period last year.
The formal personal insolvency total is made up of bankruptcies, debt relief orders (DROs), which are aimed at people with up to £30,000 of debt, and individual voluntary arrangements (IVAs), which are agreements with creditors.
Debt relief orders and individual voluntary arrangement were lower than previous quarter, but bankruptcies were “slightly higher”.
The Insolvency Service added that there were 18,347 registrations for financial breathing space over the quarter, representing an 18 per cent rise year-on-year.
It comes after inflation jumped to a joint 40-year-high of 10.1 per cent in September on the back of rocketing food prices.
Christina Fitzgerald, resident of insolvency and restructuring trade body R3, said: “Although personal insolvency numbers have fallen compared to the last quarter due to a decline in Individual Voluntary Arrangement (IVA) and Debt Relief Order (DRO) numbers, the figures are still higher than they were this time last year because of an increase in the number of people entering an IVA.
“This, coupled with the increase in bankruptcies between this and the last quarter, suggests that the cost-of-living crisis is starting to be reflected in personal insolvency numbers, as people turn to personal insolvency processes to help resolve their financial issues.
“While unemployment is down, wages haven’t kept pace with inflation and more people are borrowing money as the pounds in their pockets don’t go as far as they did 12 months ago.”
Press Association, Henry Saker-Clark.