Bankruptcies hit a four-year high in second 2019 quarter

THE number of people going bankrupt across England and Wales reached its highest level in over four years in the second quarter of 2019, official figures show.

Some 4,228 bankruptcies were recorded between April and June - the highest number for any quarter since the last three months of 2014.

The Insolvency Service, which released the figures, said bankruptcies remain low compared with 2009 to 2014 levels.

In contrast to the rising number of bankruptcies, the number of people using individual voluntary arrangements (IVAs) and debt relief orders (DROs) fell in the second quarter of 2019 compared with the previous three months.

This meant the overall number of personal insolvencies fell for the second quarter in a row, with 30,937 cases recorded.

Duncan Swift, president of insolvency and restructuring trade body R3, said bankruptcies “tend to be a reasonably good indicator of serious, unsustainable indebtedness”.

He said: “The situation is still serious for the UK’s personal finances.” R3’s latest personal debt snapshot survey carried out in March found four in 10 (40%) adults across Britain were at least fairly worried about their current level of debt, and that the same proportion (40%) said they sometimes or often struggle to make it to payday.

Alec Pillmoor, personal insolvency partner at RSM, said the Insolvency Service figures suggest that “many people continue to be overoptimistic when it comes to estimating their ability to meet repayment demands as they fall due”.

He said: “Furthermore, debt charities have also raised concerns about the rise in sub-prime credit cards being targeted at those with low credit scores.

“These can have relatively high APRs (annual percentage rates) when compared to other short-term credit alternatives and serve to further the plight of those with limited understanding of how easy it is to rack up unsustainable debt.”

Giving a general note of caution to households, he said: “Given the current weakness of the pound and Brexit-related economic uncertainty, many consumers may wish to give closer consideration to their holiday spending this summer to avoid getting into trouble further down the line.”

Official figures also out on Tuesday showed that total company insolvencies increased to their highest level in more than five years, up 12% year-on-year in the second quarter to 4,321.

This came after a 15% yearon-year surge in administrations to 400, though the rise in total insolvencies was largely driven by a jump in creditors’ voluntary liquidations (CVLs) to 3,040.

The data showed that on a quarterly basis, the number of administrations fell by 11.4% from a five-year high in the first three months of 2019, although the figure remained the second highest since 2014.

Despite the recent spate of company voluntary arrangements (CVAs) in the retail sector, the figures showed a small drop in CVAs to 92 between April and June.

This is down from 93 in the first quarter and 94 a year earlier.