The number of individuals entering a personal insolvency procedure has reduced by approximately 40 per cent compared with the previous quarter.
The figures, released by the Insolvency Service today, reveal that there were 19,783 individuals entering either bankruptcy (2,759), a debt relief order (4,465) or an individual voluntary arrangement or IVA (12,559) in the third quarter (Q3) of 2020.
This is the second quarter to be wholly affected by the pandemic and associated national measures and despite the reduction in IVAs, combined numbers of bankruptcies and Debt Relief Orders (DROs) were consistent with the previous quarter.
Alec Pillmoor, personal insolvency partner at RSM said: 'It is pleasing to see the total number of personal insolvencies in quarter 3 at their lowest for five years. The numbers reduced generally during 2019 and, other than a technical issue in the Q2 2020 IVA numbers, this trend has continued in this quarter.
‘The drop in bankruptcies in the last two quarters is more of a reflection of the current circumstances, assisted by recent legislation. The perceived increase in creditor understanding has remained, as has the apparent reluctance to act against individuals throughout the lock down period. However, as businesses look to maximise their cashflows and the courts slowly resume normal service, I anticipate that we will see this trend reverse in 2021, if not before.
‘The number of IVAs has reduced in the quarter 3, at some 37 per cent lower than the same quarter in the previous year. The ONS has recently noted that there are 673,000 fewer payroll employees in the UK since March 2020. One of the reasons for the reduction is likely to be that both individuals and creditors are wary of entering into contributions-based arrangements given the uncertainties over current trading and employment levels.’