Experts predict rise in number of people declared bankrupt
The number of people going bankrupt is expected to have jumped in early 2018 as households deal with post-Christmas debts and struggle to stretch credit limits further, according to an audit and restructuring firm.
RSM predicts official figures for England and Wales will show a 14% year-on-year increase in the number of people being declared bankrupt in the first quarter of this year, although the overall numbers of personal insolvencies are expected to remain broadly in line with last year.
Ahead of the release of the Insolvency Service's official figures on Friday, Tracker, RSM's online early alert system, predicts that personal insolvencies will reach 25,700, made up of around 4,400 bankruptcies, 14,800 individual voluntary arrangements (IVAs) and 6,500 debt relief orders (DROs).
Alec Pillmoor, a personal insolvency partner at RSM said: "While we expect personal insolvencies to have remained relatively flat in the first quarter, the number of people going bankrupt appears to have risen fairly significantly versus the same period last year.
"This may, in part, be due to the post-Christmas hangover, with those who have put too much on the plastic over the festive period realising that their debts have reached an unsustainable level.
"However, there may be other factors at play. The latest Bank of England report notes that the availability of unsecured credit decreased significantly in quarter one, with a tightening of credit scoring for credit card and loan applications.
"This has made it harder for those reaching their credit limits to extend themselves yet further and may have led some to file for bankruptcy."