Are we Passed the Peak in Personal Insolvencies?

Debt is at record levels with personal credit now exceeding lb215 billion or lb4,100 for each adult in the united kingdom. However, having reached unprecedented levels in 2021, we feel the growth in personal insolvency may have peaked, and with an increased focus on debt advice, volumes will probably stabilise through 2021 and 2021.

In recent years, as Individual Voluntary Arrangements have grown to record levels, the number of personal insolvency providers has almost halved. This has led to an industry dominated by a small amount of large firms who are highly successful at marketing insolvency like a managing debt means to fix consumers. Over the same period, alternative debt solutions which aren't commercially viable, for example Debt Relief Orders – normally supplied by debt charities – have witnessed negligible growth.

With an increasing regulatory focus on expanding awareness and use of debt advice and solutions – typified by government consultations on a Statutory Debt Repayment Plans and formalising Breathing Space for individuals in debt – we expect to see IVA growth stabilise as more consumers manage problem debt utilizing a broader selection of solutions, including DROs, SDRPs and Debt Management Plans .

On 1 January 2021, Sir Hector Sants became Chair from the Single Financial Guidance Body – formerly the Money Advice Service. He's already made his ambition for debt advice clear: by December 2021 he wants 500,000 more people a year to obtain free and efficient debt advice. We feel that these positive trends can help break down society's stigma around debt. At present, 8.3m individuals are over-indebted and fewer than the usual quarter seek help. The normalisation of debt will enable individuals to talk more freely about money and identify when they should seek assistance.