During 2014, as many as 99,200 people were deemed insolvent, either as a consequence of bankruptcy, setting up an individual voluntary arrangement, or a debt relief order.
That proved to be a decrease of 2% from the previous year, and was the 4th consecutive year where a drop in the insolvency rate occurred.
Companies also appear to be experience better financial health, which the number of businesses going into administration having dropped to just 1,790 – the lowest it has been since 2004, and a 24% decrease from 2013.
Added to this, the number of businesses having to go into receivership, which is another type of corporate insolvency, dropped to only 724 – a decrease of 21% and the lowest number since 2007.
These developments for both individuals and companies may reflect improvements in the economy; as fewer and fewer business owners are declaring insolvency in order to deal with unmanageable debt.
The Insolvency Service, after publishing the figures, commented: “In total, individual insolvencies have generally been on a decreasing trend since 2010.”
Mathew Chadwick from accountants BDO, stated that he believed the drop in personal insolvencies was to be predicted: “Individuals and households are benefitting from increasing competition for mortgages, a rebounding jobs market, a nascent supermarket price war, falling petrol prices and energy tariffs and stalling consumer inflation,”
But also added: “However as the economy grows, creditors may be emboldened to collect old debts, and some consumers will once again overreach themselves.”
Mark Sands from accountants Baker Tilly made the comment: “In a sense, conditions for those with problem debts couldn’t be better.
“Interest rates are at historic lows, we know that they’re going to stay at that level for longer than we originally thought, and creditors are increasingly willing to engage with debtors to agree informal repayment plans over formal insolvency procedures.”
In contrast to this, Joanna Elson, the chief executive at the Money Advice Trust stated that there are still many individuals who are experiencing financial hardship: “While it is really welcome to see insolvencies reach their lowest level in nearly a decade, on the debt advice front line we know that more and more people are falling into difficulty with smaller debts from everyday household bills,”