The latest insolvency statistics have been published by the Insolvency Service, which show that total individual insolvencies have increased marginall…
The latest insolvency statistics have been published by the Insolvency Service, which show that total individual insolvencies have increased marginally by 0.3 per cent since Q4 2015, but are still 2.2 per cent lower than the same period a year ago.
This was driven by a 3.4 per cent increase in debt relief orders (DROs), which was caused by a change in eligibility criteria. Of the 6,722 DROs in Q1 2016, about a quarter involved qualifying debts greater than the previous threshold of £15,000.
Previously, only people with debts below £15,000 could apply for a DRO, but in October last year the limit was increased to £20,000, enabling more people to use DROs as an alternative to going bankrupt.
Sarah Albon, chief executive of the Insolvency Service, said: "Personal insolvencies are lower than a year ago. The change to eligibility criteria for debt relief orders, introduced in October, has enabled more people to get the solution that is right for them."
This change seems to have had a positive effect though, as the number of individual voluntary arrangements (IVAs) and bankruptcies decreased by 1.2 per cent and 0.7 per cent respectively.
This illustrates the success of the change in eligibility criteria for individuals; however, it's a different picture for companies.
The total number of insolvencies increased for the first time since Q1 2014, which was down to a large rise in the number of compulsory liquidations.
The figures show that construction remains the sector with most insolvencies, although the numbers are decreasing more quickly than the total.