Figures suggest a decrease in bankruptcies and Individual Voluntary Arrangements (IVAs)
RSM expects the volume of Debt Relief Orders (DROs) for the fourth quarter of 2015 to have risen by 16%, while bankruptcies are down.
Data complied by RSM suggests that the Insolvency Service will announce tomorrow (29 January) that there were around 20,000 personal insolvencies in England and Wales in the final quarter of 2015.
The figures also suggest a decrease in bankruptcies to around 3,500, and around 10,000 Individual Voluntary Arrangements (IVAs), the firm said.
If the predictions are accurate, that would make a total number of personal insolvencies of 80,000 for 2015. RSM expects the steady decline, seen since numbers peaked in 2010, to continue into 2016 with a further reduction in overall numbers, to between 70,000 and 75,000, the lowest since 2005.
Mark Sands, personal insolvency partner at RSM said: “Our data suggests a sharp increase in Debt Relief Orders for the fourth quarter of 2015 and we can attribute this to changes in the law which came into play on 1 October last year.
“Instead of being eligible to people with personal debts of no more than £15,000, and having assets worth less than £300, you can now enter a DRO if you are in up to £20,000 worth of personal debt, and have less than £1,000 worth of personal assets. These changes have opened up the criteria for those having problems repaying their debts to enter into a DRO instead of taking the more severe option of bankruptcy or continuing to struggle with debts they simply cannot afford to repay.
“Although we’ve seen a sharp jump in DROs, the total numbers of personal insolvencies remain largely the same, with a steady downward trend year on year since the financial crash in 2009 and I expect we will see a continuation of that downward trend in 2016 too.”