The number of Individual Voluntary Arrangements (IVAs) taken out by people with debt problems increased in 2014 for a second year running to reach record levels, according to the official insolvency statistics released today.
However the overall number of personal insolvencies fell for the fourth successive year, to below 100,000.
The figures from the government’s Insolvency Service show there were 52,190 IVAs in 2014, up 6.8 per cent on the previous year and the highest since IVAs were introduced in 1987. In total 99,196 people were declared insolvent, down 1.8 per cent on last year and the lowest since 2005.
Richard Wolff, North West chair of R3 and Head of Corporate Recovery at JMW Solicitors, said that 2014 had seen the continuation of the trend of falling bankruptcies and Debt Relief Orders.
“Individual Voluntary Arrangements are now firmly the dominant form of personal insolvency,” he said.
“Personal insolvencies will probably hover around the 100,000 a year mark, although it should be remembered that this is only part of the picture as this figure does not include debt management plans. The explosion of personal debt before the financial crisis means that this ‘new normal’ level of insolvencies is far higher than it was at the turn of the century.”
He added: “Although falling inflation has eased pressure on household finances, the fall could be partially the result of deep-seated consumer debt problems: inflation’s falling because people aren’t spending, and one reason people aren’t spending is because there’s still a lot of burdensome consumer debt out there. People expect that interest rates will inevitably rise and, rather than going out and continuing to spend, may be trying to pay down as much debt as they can ahead of that time.”