The number of people entering into a formal insolvency process rose by 9.4 per cent in 2017, with insolvencies returning to levels last seen in 2014.
The figures, released by the Insolvency Service showed that there were 15,082 bankruptcies, 24,894 debt relief orders and 59,220 Individual Voluntary Arrangements (IVA) in 2017.
There were also a record number of IVAs numbers as more people opted to use this route to repay debts over a five year period.
Alec Pillmoor, personal insolvency partner at RSM said:
‘There are clearly growing levels of financial distress in some households, due in part to rising interest rates, falling wages or changes to employment status.
‘Over the last two years, there’s been a 23 per cent increase in the number of people entering an insolvency process. This is despite employment levels being at a record high.
‘Instead, high levels of indebtedness – even for those with regular incomes - is such that they have no option but to enter one of the insolvency routes.
‘We’ve seen a notable increase in the use of IVAs which have risen by 20 per cent in each of the last two years. This suggests many people are taking a proactive approach to resolving their financial issues.
‘Opinions appear to be mixed over the outlook of the economy and the direction of interest rates over the next year.
‘In the FT’s most recent annual survey of economists, a fifth predicted there would be no further interest rate rise this year, while two-fifths expected rates to rise by at least 0.5 percentage points. If the latter turns out to be true, then even more over-indebted households may find themselves in difficulty.’