Personal insolvencies in the UK hit a three-year high in March as cheap credit availability began to catch up with British consumers.
Individual Voluntary Agreements (IVAs), where funds are shared among all creditors, were responsible for the majority of the insolvencies, representing 59 per cent of the 24,531 personal insolvencies recorded across England and Wales over the month.
The quarterly total for insolvencies in the first quarter of 2017 represented the highest level for three years since the second quarter of 2014, and was 15.7 per cent higher year-on-year from the first quarter of 2016.
The figure was also 6.7 per cent up on the previous quarter at the end of 2016.
Debt relief orders, which are only available to those with less than £20,000 of debt, made up 25 per cent of all insolvencies during the quarter from January to March.
The remaining 16 per cent were actual bankruptcies, which only normally occur when all other options have run out.
Company insolvencies were actually down by 29.1 per cent compared to the previous quarter at an estimated 3,967. Though this figure still represented a rise of 5.3 per cent year-on-year when compared with the equivalent first quarter of 2016.
It was confirmed by the Insolvency Service that the particularly high level of company insolvencies in the last quarter of 2016 was partly caused by a ‘one off event’.
They considered that if this ‘one off event’ were excluded from the figures, the trend would actually show an increase of 4.5 per cent this quarter when compared to the last quarter of 2016.
Despite high employment levels and interest rates at historic lows, It is thought by experts that the increased insolvency figures could be down to many people being tempted by attractive loan deals, car finance offers and low fixed-rate mortgages, but now finding that shop-price inflation is leaving them with less available cash to meet repayments when they fall due.