An online insolvency warning system is predicting that there will be a nine per cent rise in personal insolvency rates in England and Wales in the second quarter of this year, compared to the same period in 2018, reaching around 31,500 cases.
Of these cases, it says that there will likely be 4,200 bankruptcies, 20,500 Individual Voluntary Arrangements (IVAs) and 6,800 Debt Relief Orders (DROs). It has also predicted that the number of young people aged between 18 and 25 entering a formal insolvency process will have risen from 208 by the end of Q1 in 2016 to almost 2,000 by the end of Q2 this year.
There has been a corresponding rise in the percentage of young people aged between 18-25 entering a formal insolvency process as a proportion of the overall number for all age groups. This proportion has grown from one per cent in Q1 2016 to 6.5 per cent in the latest quarter.
There could be numerous reasons for the rise in insolvency rates in younger people, for example, relatively easy access to credit at a time when interest rates are very low. In this case, the ease could encourage young people without financial experience and awareness of how easy it is to rack up unsustainable debt, to try to obtain money,
Moreover, the rise in the gig economy and zero-hours contracts have contributed to the increase in more flexible, but less secure ways of working, which means that budgeting, which could be a challenge for this age group, becomes more important.
Tim Close, Insolvency Partner at Milsted Langdon said: “The newly obtained data is predicting an increase in the number of personal insolvencies in the second quarter of this year.
“If you are concerned about your finances and believe insolvency may be one of your only options, then it is important that you seek specialist advice. Contact our expert team today to find out how we can help.”