The number of individual going bankrupt in the UK has been clouded by the arrival of “bankruptcy lite” – the Individual Voluntary Arrangement (IVA) - according to personal insolvency expert Mark Sands, a partner at corporate recovery and business advisory firm Quantuma.
The latest figures for 2017 released by The Insolvency Service show that while the figure for individuals opting for bankruptcy as a way out of debt was up by 10%, the number opting for IVAs was up nearly 20%.
In an IVA, the individual reschedules debts and agrees to much lower repayments. In 2017, the number resorting to IVAs hit a record of 59,220.
Mark Sands said: “The introduction of IVAs has somewhat clouded the overall statistics, but what we can determine is that there is no recent consistent trend in personal insolvency rates.
“In particular, the number of IVAs, a flexible alternative to bankruptcy which is popular with those with multiple consumer debts which they are struggling to juggle, has risen and fallen each quarter throughout 2017.
“The market for advice to consumers in debt has moved in focus from debt management plans, an informal arrangement with no debts forgiven, to IVAs where the debtor has more certainty in return for making regular payments towards their debts,” he said.
But he pointed out that even if overall personal insolvency numbers remained at the same levels in 2017, then another 100,000 people would still enter into some form of personal insolvency in 2018.
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Notes to Editors
Quantuma LLP is a leading corporate recovery and business advisory practice delivering partner-led solutions to businesses and individuals facing financial distress with offices in London, Southampton, Marlow, Watford, Brighton, Bristol, Manchester and Birmingham.