Bankruptcies expected to rise to highest levels in five years
The amount of people declaring bankruptcy is anticipated to reach its highest quarterly level in five years.
Official figures for the first quarter of 2019 are due for release by the Insolvency Service, which comprises three types of personal insolvency; bankruptcy, individual voluntary arrangements (IVAs), and debt relief orders (DROs).
DROs are a type of insolvency aimed at people with lower levels of debt, whilst IVAs are where the money is shared out between the creditors.
It is predicted that the total number of personal insolvencies will be in excess of 30,000, made up of 19,000 IVAs, just under 7,000 DROs and over 4,400 bankruptcies.
Since 2011, IVAs have been the most common individual insolvency, while bankruptcies fell after the introduction of DROs back in 2009.
These figures would be the highest level since the fourth quarter of 2014, and the highest total in Q1 for eight years.
The trend of increasing personal insolvencies continued in 2018, with 115,299 people going insolvent. This was the third consecutive year the figure increased, and the highest cumulative total since 2011, when almost 120,000 cases were logged.
These figures come as UK unemployment figures have been promising, with more people than ever in work, with the number of people in full-time work growing.
However, the increase in consumer confidence is believed to be linked to borrowing and consumer credit, rather than an increase in disposable income.
The causes of rising insolvencies are multiple, such as economic stagnation and the troubled Universal Credit roll-out. But the high volume of IVAs being offered, as well as rising credit card debt, which now stands at £2,649 per household, are leading causes.