The growing number of individuals entering a personal insolvency procedure displayed “few signs of slowing” as the rolling twelve-month insolvency figure continued to rise, representing the highest second quarter figure since 2010.
The figures, published by the Insolvency Service today, revealed there were 30,936 individuals entering either bankruptcy (4,228), a debt relief order (6,752) or an individual voluntary agreement (IVA) (19,956) in Q2.
Furthermore, the data revealed that 1 in 382 adults entered a personal insolvency procedure in the rolling twelve-months to the end of June – a higher ration than the 1 in 388 adults in the rolling period to the end of Q1.
Commenting on the figures, RSM personal insolvency partner Alec Pillmoor said: “'As we predicted, following the near decade long highs of 2018 and Q1 of 2019, personal insolvency numbers remain high and remain comparable to the first quarter of 2019, resulting in an increase in the rolling 12-month insolvency rate.
When compared to the same quarter in 2018, insolvency levels have risen by 7.2 per cent, suggesting that many people continue to be over-optimistic when it comes to estimating their ability to meet repayment demands as they fall due.
Highlighting the rise in insolvencies among young adults, Pillmoor added: “Back in 2016, insolvencies among adults under 25 only accounted for one per cent of the total. Our research shows that this has risen to around 6.5 per cent today. In this climate of low interest rates and relatively easy access to credit, it is entirely feasible that young people without financial experience or literacy may be more susceptible to the temptations of easy money.”
The RSM personal insolvency partner also drew attention to sub-prime credit cards being targeted at those with low credit scores, emphasising that many deb charities have raised concerns over the product.
Sub-prime credit cards often have relatively high APRs when compared to other short-term credit alternative and, according to Pillmoor, “serve to further the plight of those with limited understanding of how easy it is to rack up unsustainable debt”.
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