The number of insolvent citizens is growing in the UK

The first quarter of 2022 was marked by an increase in the number of people who declared their insolvency in England and Wales.  At the same time, the data does not include the consequences of the increase in the cost of living, which affected the British in April.

According to Sky News, citing information from the Insolvency Service, 32,305 bankruptcies were recorded among residents in the first three months, which is 17% higher than the same figure for October-December 2021.  Compared to the same data for the first quarter of 2021, there was an increase of 14%.

It is noted that bankruptcy is perceived in the UK as a measure of last resort.  More often, people tend to enter into "individual voluntary arrangements" (IVAs) or sign a "debt relief order" (DRO).  In the case of an IVA, we are talking about a situation where existing assets are distributed among creditors.  The situation with DRO is slightly different.  It is available for persons with a relatively small amount of debt, but with no realistic prospect of repaying it.

Last year, the upper limit of financial debt, having which the citizens could apply for a DRO, increased from 20 to 30 thousand pounds.  Despite this, the number of citizens having debts has grown, not taking into account the April increase in prices for many daily needs.

Millions of British are facing rising electricity costs.  In early April, municipal taxes increased, and the rates in the national insurance system increased as well.  Inflation hit a 30-year record of 7%.  At the same time, wages do not keep pace with the prices, since the annual increase in wages offered by employers is about 4%.

Barclays and Sainsbury's credit organizations said last week that their clients had cut spending as the cost of living is rising.  This process is accompanied by massive bankruptcy of almost 5,000 companies, where insolvency rates have almost doubled compared to the data for the same period of 2021.

According to statistics, the voluntary insolvency of enterprises in England and Wales has reached its highest level in 60 years.  This increase was caused by voluntary liquidations, the number of which increased by 117% per year (about 4.3 thousand organizations).