Insolvency at lowest rate since 2006
04/11/2014
According to official figures from The Insolvency Service, insolvency is at it’s lowest rate since before the Financial Crisis in 2008.
The rate of insolvency has fallen over the past year from 0.6% in 2013 to 0.22% in the 12 months to September 2014.This is the lowest rate since the spring of 2006, the figures show.
A person falls insolvent when they are not able to pay their debts when they are due and decide to enter into bankruptcy.
The number of bankruptcies has been on a decreasing trend since 2010, with the rate of decrease most rapid following the introduction of Debt Relief Orders (DROs) in 2009. There were 4,886 bankruptcy orders in the third quarter of 2014, the lowest level since 1999.DRO’s were introduced as an alternative option to bankruptcy for people with debts less than £15,000.
Many people have decided to apply for an Individual Voluntary Agreement (IVA) instead of going bankrupt due to the fact that this is potentially cheaper, and less damaging to credit files.
Graham Horne, the Insolvency Service's deputy chief executive said:
"Today's figures show that the personal insolvency rate is at its lowest level since 2006.
“It is still important that people experiencing financial difficulties should seek early advice."
Matthew Chadwick, Head of personal insolvency at accountancy firm BDO , said:
“Jobs figures are up, mortgage rates are down - and becoming more competitive - and interest and inflation rates are stable, which in theory should boost economic health and confidence.
“However, these positives are counterbalanced by sluggish or non-existent wage growth, lower-than-expected tax revenues - suggesting that the new jobs being created may not all pay well - and market volatility caused by worries over the Chinese and Eurozone economies.
“Paradoxically, we may see personal insolvencies rise as confidence returns. Then, people may feel more comfortable with taking out new credit, and lenders more comfortable with collecting old debts."
Need financial advice?
If you have any personal finance questions related to this news article, then please contact our financial advisers. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit
Share this..
Related stories
Bank of England calls for more power
The UK regulatory framework for the financial sector looks like finding itself in the middle of a serious power struggle after the Bank of England announced that it would request more powers from the government to intervene directly in markets. This has the potential to put the Bank at odds with the FSA which for many years now has been the preferred regulator of the financial services market.
Will the euro survive financial difficulties in the euro zone?
There is no doubt that the ongoing financial difficulties in Spain, Portugal and Greece are impacting upon the reputation and investment profile of the euro. While there are suggestions that the short-term fall in the value of the euro, against the dollar in particular, could slow as "short" positions are closed many feel that the end of the fall is not yet in sight. So what can the European Union...
Read MoreSupermarkets take 58p of every Retail Pound
A report from the Payments Council has revealed that in 2011 supermarkets took 58pc of the entire retail spend in the UK. This means that almost 60p in every pound spent on the high street goes to supermarkets, a figure that is up from 48p compared to 2001, and marks an all time high. The report also revealed a change in the payment culture of consumers, who are increasingly using plastic in t...
Read MoreIndia central bank increases interest rates
The India central bank has today increased interest rates for the second time in two months as the authorities attempt to balance the battle against inflation against the battle to keep the economy moving forward. This is a very similar situation to the UK government where inflation has started to rear its ugly head and is potentially going to be a problem in the short to medium term. While the...
Read MoreWill loyalty cards rescue the UK retail market?
Over the last few days we have seen a significant number of retail companies revamping and relaunching their loyalty cards. Tesco has spent in the region of £150 million on a relaunch of their Clubcard operation although this just appears to be the tip of the iceberg. There is a feeling among retailers in the UK that loyalty cards will not only attract more customers that they will in due course...
Read More