According to the latest figures from the Insolvency Service (IS), the number of people declaring financial insolvency across England and Wales reached its highest levels in the last seven years during 2018.
The IS found that 115,299 people went insolvent during 2018, making it the third successive year-on-year increase and the highest annual total since 2011.
Included within the latest figures is those who have been declared bankrupt, as well as those using debt relief orders (DRO) and individual voluntary arrangements (IVAs).
In the last year, 61.6 per cent used an IVA, 24 per cent used a DRO and 14.4 per cent entered bankruptcy, reflecting that more people are taking advice early to address their insolvency issues.
The Insolvency Service said the 16.2 per cent year-on-year jump in personal insolvencies was driven by IVAs, which reached record levels last. When compared to other years this shows that there were 71,034 IVAs last year, up 19.9% on 2017’s figures.
Drilling down further into the data showed that Between October and December, there were 34,108 personal insolvencies, which was 34.8 per cent higher than the three months before.
In fact, according to the Government figures personal insolvencies in the fourth quarter of 2018 were at their highest since the second quarter of 2010.
Stuart Frith, president of insolvency and restructuring trade body R3, said: “As banks and other lenders have tightened their credit standards in response to the Bank of England’s concerns around consumer over-indebtedness, many people have run out of road.
“In previous years, the ‘helicopter money’ provided by PPI refunds, along with generally less stringent lending requirements, helped to paper over the cracks that opened up as a result of a decade of persistently stagnant wage increases, but these avenues look to be closing themselves off.
“People are having to spend more of their income on housing and transportation, leaving less left over for savings and making budgets more vulnerable to shocks.”
“People just don’t have much spare cash at the moment, reflected in the rise in the number of personal insolvencies also confirmed today.”