Insolvency Trends as Expected
Debt Relief Orders increased by 11% to 113 applications approved, due to more individuals applying when legislative changes came into force in November 2016 where the limit of unsecured debt changed from £15000 to £20000. Assets value increased to £1000 from previous value of £300.
Individual Voluntary Arrangements (IVA) approvals increased by 25% to 409 which is the second highest third quarter increase since 2007. This may reflect the fact that clients want to repay their debt in a timely manner and are therefore are seeking advice earlier. The FCA regulations have squeezed fee charging companies out of the market. IVAs are available at lower levels of debt and income and people may well reflect on the unrealistic length of a Debt Management Plan compared to an IVA.
Company insolvencies decreased with only 58 in third quarter of 2017.
Mark Baird, NI Business Debtline Adviser says,
‘Although the current figures for 2017 are lower than 2016, as we approach the end of the year they are still expected to break the 4,000 barrier for the second consecutive year. As dissolutions are not classified as a formal Insolvency Procedure, this figure can sometimes go unnoticed however it is a further indication that businesses are continuing to struggle in the current economic climate, have exhausted all other possible avenues to allow them to continue to trade and that they have no realisable assets remaining to enter into an arrangement with their creditors’.
Our NI formal insolvency figures are lower than GB, based on population however the 2016 changes were introduced to enable more individuals to benefit from the DRO provisions and avoid costs, restrictions and the impact of Bankruptcy. This appears to be successful.
On 6th April 2017 new insolvency rules came into legislation in England & Wales which reflects 30 years of advancement in technology and more simplistic and transparent procedures, all with a view to assisting the client journey – given the current suspension of the NI Executive it is difficult to predict a timeframe for these changes to be introduced here.
With the growth of technology many individuals are now seeking advice from varied anonymous medium eg increased use of apps, Facebook and twitter and websites enquiries as well as trusted face to face meetings with intention to settle matters rather than delay the inevitable with increased interest and charges accruing. Many organisations are now using these platforms to promote offers and provide financial capability information which increases individual’s knowledge of options.
The NI Specialist Support Team