Will there be more UK personal bankruptcies in 2023?

Becoming bankrupt can feel like a last resort, and possibly a relief if you have been drowning in debt for what feels like forever.

Once you have been declared bankrupt, any income you don’t need for essential expenses, property, and other assets you own is used to pay off creditors. The upside is that debts are cancelled at the end of 12 months, the downside is that you will have to hand over things you own.

With prices rising and mortgage interest rates shooting up, a lot of families are feeling the pinch. Food costs more, energy is expensive, and mortgages are becoming unaffordable. Not surprisingly, you might be wondering if personal bankruptcies are likely to increase this year.

The Data

Despite the current cost-of-living crisis, the number of people declared insolvent was lower in January of this year compared to January 2020, but bankruptcies were higher. Note that insolvencies include bankruptcies, debt relief orders (DROs), and individual voluntary arrangements (IVAs).

Government figures for the first quarter of 2023 show that the number of personal bankruptcies was 2 percent lower than in December 2022, with 1,737 people declared bankrupt. Individual voluntary arrangements (IVAs) were also lower, but debt relief orders were higher. The same figures show that one in 408 adults became insolvent in the year ending 31 March 2023, which is a very slight increase on the previous 12-month period.

Some areas have seen a bigger increase in bankruptcies than others. While Yorkshire and the Humber have experienced a fall in people being declared bankrupt, the East Midlands has seen an increase in bankruptcies. The number of bankruptcies is higher for men than women, and also in the 35-44 age bracket.

What Does the Future Look Like?

None of us have a crystal ball, but while inflation remains high, household incomes are unlikely to rise. Right now, inflation is running at 8.7 percent, but the government target rate is 2 percent. The good news is that the Bank of England expects inflation to start falling by the end of 2023. If this does happen, energy prices will fall, and people will have more money to spend.

Right now, however, times are rough. People are struggling to pay their bills, heat their homes, and buy food. If you are one of them, you might be wondering if filing for bankruptcy is the way forward. Or you could have a creditor trying to make you bankrupt. Either way, it’s not a nice situation to be in.

The good news is that you can stop your bankruptcy in its tracks by working with a specialist. What’s important is that you act fast if your debt burden is becoming too much to handle and creditors are beating a path to your door. The worst thing you can do is ignore the problem and hope it will go away. It won’t!

What are Your Options?

Bankruptcy is the most serious option available to people who can’t pay off their debts. This could happen if you lose your job and can’t find another, because of a relationship breakdown, mismanagement of money, or just plain bad luck. Often, it is a combination of reasons.

If you become bankrupt, an official receiver is appointed. To add insult to injury, you’ll have to pay to be made bankrupt. After 12 months, your debts are written off, but bankruptcy will remain on your credit record for at least six years, which will impact your ability to get credit or a mortgage.

Thankfully, there are now options available for people in major debt. A debt relief order, involuntary arrangement, and other types of insolvency can help you avoid bankruptcy, but it’s important to speak with an expert so you can properly understand what help is available. What’s important is that bankruptcy is not always necessary.

Work with Insolvency Practitioners

Speak with an insolvency practitioner. Licenced insolvency practitioners can apply for a bankruptcy annulment, deal with statutory demands and final notice debt collection letters from creditors. They can also advise you on what your best options are, as well as help you reach a settlement before bankruptcy proceedings begin.

If you are worried about debt, bankruptcy or possible insolvency, contact Asset Solutions today on 0800 689 3861. Our experienced team members provide unrivalled assistance to individuals throughout the entire insolvency process and help to stop bankruptcy. We understand that anyone facing problem debt is likely to feel overwhelmed and intimidated. That’s why we’re here to support you throughout the process and help you achieve the best results possible for your situation. Contact us today for more information.