Personal insolvencies up by nearly 20%

PA

The number of people going insolvent across England and Wales jumped by a fifth in the third quarter of 2016 compared with the same period a year earlier.

There were 24,251 personal insolvencies between July and September, marking a 19.3% increase compared with the third quarter of 2016 as well as a 6% rise on the second quarter of this year.

Within this total, bankruptcies, which are often seen as a last resort, increased by 7% compared with the second quarter, with 3,844 new cases recorded in the second quarter, the figures from the Insolvency Service show.

Despite the recent jump, bankruptcies are still down by 1.5% compared with a year ago.

The rising numbers of personal insolvencies have also been driven by an increase in individual voluntary arrangements (IVAs), which are agreements whereby money is shared out between creditors. There were 13,917 IVAs in the third quarter of 2016, 10.9% higher than in the second quarter and a 28.8% increase compared with the same period a year earlier.

Meanwhile, there were 6,490 debt relief orders (DROs), marking a 3.7% decrease compared with the second quarter but up 15.3% compared with the third quarter of 2015.

DROs are often dubbed "bankruptcy light" as they are aimed at people with smaller amounts of debt but no realistic prospect of paying it off.

Over the last 12 months, one in 515 adults across England and Wales became insolvent. This was up from one in 541 in the 12 months ending in the second quarter of 2016 and it marks the second increase in a row in the insolvency rate.

Before the recent increases, personal insolvency rates had generally been on a downward path between 2010 and early 2016, the Insolvency Service said.