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Bankruptcy figures hit record low in Q3

Figures reveal that there were 26,758 individuals entering either bankruptcy (1,938) a debt relief order or DRO (5,735) or an individual voluntary arrangement or IVA (19,085) in the third quarter (Q3) of 2021

The number of individuals entering bankruptcy has hit a record 22-year low with only 1,938 bankruptcies occurring in the quarter according to figures released by the Insolvency Service.

At the same time, the number of individuals entering a debt relief order (DRO) has increased by 31% in the quarter to become the highest quarterly total by some distance since the start of the pandemic.

This is the sixth quarter to be wholly affected by the pandemic and associated national measures, and whilst individual voluntary arrangements (IVA) numbers decreased by 9%, they again exceeded the immediate pre-pandemic quarterly average for the fifth quarter in the last six.

The figures reveal that there were 26,758 individuals entering either bankruptcy (1,938) a debt relief order or DRO (5,735) or an individual voluntary arrangement or IVA (19,085) in the third quarter (Q3) of 2021.

Commenting on the figures, Andy Nalliah, personal insolvency partner at RSM UK said: “Of the 1,938 bankruptcies in the quarter, the Insolvency Service report that only 11% have arisen because of creditor petitions.

“It should be noted that now that Governmental support has reduced, particularly as regards the cessation of the Furlough Scheme on 30 September, I expect creditors to reassess their options and the forbearance they have demonstrated over the last 18 months will begin to cease.”

She added: “Whilst IVA numbers have fluctuated since the start of the pandemic, the numbers for the Q3 were 9% down on those seen in Q2 (before Seasonal adjustment), the rolling 12-month rate is the highest since IVAs were introduced in 1986. Moreover, five of the six quarters wholly affected by the pandemic’s restrictive measures have seen IVA volumes exceed the immediate pre-pandemic average.

“Further, the continued high numbers of IVAs continue to suggest that despite the well-publicised issues facing our workforces and the question marks of the sustainability of employment, individuals have never been more proactive in addressing their financial health as a means to manage and pre-empt creditor pressure and possibly avoid bankruptcy.”

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