Personal insolvency expected to increase again in 2018
The number of people expected to enter personal insolvency will increase again in 2018, according to an audit by tax and consulting firm RSM.
Personal insolvency is when an individual can no longer meet their obligations with lenders as debts become due. It is often caused by difficulties in cash management, a reduction in cash flow forecasts or from increases in expenses.
24,500 expected to declare insolvency in Q4 2017
The Insolvency Service, a Government-run executive agency that supports people in financial distress, released figures last year that showed over 74,000 people in England and Wales were declared insolvent in the first three quarters of 2017. The final quarter's figure is expected to amount to around 24,500 people, according to RSM's latest report. This would push 2017's total up to 98,500, which is the highest figure seen in 36 months – and a 7% increase on the previous year.
If the year-on-year trends from RSM’s tracker predicting system continue, the figure will stand to increase again for 2018. This is unusual in a time of rising employment; many commentators suggest that the increase is due to thousands of people following non-statutory debt plans. These are drawn up in parameters set out by the Financial Conduct Authority, but can become difficult to follow if the debtor doesn't have excess income to use.
Avoiding insolvency and increasing debts
There are a number of small ways in which you can work to future-proof their cashflow and help to stay out of insolvency.
Begin by ascertaining where your money is going. From taking a thorough look at bank statements to drilling down into your receipts, it is useful to take stock of your outgoings in order to gain a clear picture of spending habits.
If applicable, stop direct debits and pay manually. Track the dates of your income(s) and match those up against existing direct debits. Additionally, research affordable credit options, a simple method that could result in reducing the total sum paid back overall.
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