Women 'increasingly more likely than men to become insolvent'

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Women are increasingly more likely than men to see their finances deteriorate so badly that they become insolvent, official figures show.

The rate of female insolvencies across England and Wales first overtook that for men in 2014 - and since then the insolvency gender gap has widened.

In 2016, for the first time, women were more likely than men to take out a form of insolvency called an individual voluntary arrangement (IVA) - an agreement whereby money is shared out between creditors.

Women had a rate of 10.9 IVAs per 10,000 adults last year, while for men the rate was 10.6, figures released by the Insolvency Service show.

Debt relief orders (DROs), which are often dubbed "bankruptcy light" as they are aimed at people with lower amounts of debt which they cannot pay off, are another formal type of insolvency which women have been consistently more likely than men to take out since they were first introduced in 2009. 

Men are still more likely than women to go bankrupt - the third official type of insolvency. 

In 2016, women had an overall insolvency rate of 20.6 per 10,000 adults, while for men the rate was 18.7 - a difference in the rate of nearly two between the sexes.

In 2014, when female insolvency rates overtook that of men, the rate was 22.2 for women per 10,000 adults and 21.2 for men - a smaller difference of one.

Mark Sands, chair of trade association R3's personal insolvency committee, said: "Women are much more likely than men to use a DRO, which is designed to help people with assets under £1,000 unable to pay even low value debts.

"It's very easy to 'over-spend' if you don't have much money available to you in the first place. Penalties like unauthorised overdraft charges or missed payment fees can become a problem and can keep people in a debt spiral.

"Lower incomes and employment levels mean women are more likely to be vulnerable to financial shocks and have less room for financial manoeuvre than men."

Mr Sands said men are more likely to be affected by bankruptcies, which can be used to deal with larger value assets or debts - sometimes linked to a company failing or the loss of a job.

He continued: "Given men are more likely to own their own business or be in full-time employment, it's not a surprise that men use bankruptcy more.

"With a growing economy, bankruptcy numbers have been dropping steadily since 2009-10, which has helped insolvency rates fall faster in the medium-term for men than women."

The changing role of women in society and the economy is also an influence, he said, as women's employment and income levels have increased.

If female entrepreneurship grows, this could also bring female bankruptcy levels more into line with those for men as more women run their own business, he suggested.  

Mr Sands said another "key factor" behind why women are now involved in more insolvencies is that the insolvency process itself has become more effective at dealing with different types of problem debt.  

He said: "This has made insolvency numbers more accurately reflect existing financial inequality between men and women."