Figures show steep rise in recorded personal insolvencies

The number of people whose financial situation became so bad that they went insolvent jumped by 13% year-on-year in 2016, official figures show.

Some 90,930 personal insolvencies were recorded across England and Wales, marking a 13.1% uplift compared with 2015, the Insolvency Service said.

The upswing was driven by an increase in people taking out individual voluntary arrangements (IVAs) - an agreement whereby money is shared out between creditors.

Having fallen in 2015, IVA numbers jumped by 23.2% in 2016, with 49,745 cases recorded.

The official figures are also made up of bankruptcies and debt relief orders (DROs) - a type of insolvency often known as "bankruptcy light" which is aimed at people with lower levels of debt that they cannot pay off.

Bankruptcy numbers fell in 2016 compared with a year earlier, with 14,989 bankruptcy orders recorded, down 5.4% on 2015.

There were 26,196 DROs in 2016, an 8.4% increase on 2015.

A recent increase in the amount of debt that people taking out a DRO were allowed to have has enabled more people to take out DROs instead of going bankrupt, which is often seen as a "last resort".

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