Statistics released by the Insolvency Service today show that for the second quarter of 2015, personal insolvency numbers were 30 per cent lower than the same quarter last year, the biggest drop in personal insolvencies seen since at least 1985.
The figures released today show there were 19,008 personal insolvencies, made up of 5,832 Debt Relief Orders (DROs), 9,225 Individual Voluntary Arrangements (IVAs) and 3,951 Bankruptcies.
Mark Sands, Personal Insolvency Partner at Baker Tilly said:
‘As the data from our early warning Tracker service suggested, we’ve seen a sharp drop in overall personal insolvency numbers in comparison with quarter two of last year.
This could be down to the fact that over the last 18 months, we’ve seen both changes in the debt market and the way in which people are now dealing with their debts.
The Financial Conduct Authority (FCA) has carried out a recent review of debt solution companies and their products, particularly Debt Management Plans (DMPs), which led to a flurry of those in DMPs being entered into new or different plans. This activity produced an illusion of more people going into personal insolvency procedures and therefore we saw a hike in numbers. Now this activity has died down we’re seeing a drop in overall figures.
We are also seeing a general downward trend in personal insolvencies as confidence in the country’s financial health starts to return.
However, the recent statement from the Bank of England about the imminent interest rate rise should act as a reminder that a lot of households are likely to struggle financially next year as interest rates rise.’