Individual Insolvencies Fall in Q1 2011

Individual insolvencies across England and Wales were down 15.5% in quarter 1 of 2011 compared with the same period last year.

The 30,162 insolvencies were made up of 12,539 bankruptcies (down 31.3% on the corresponding quarter of 2010), 10,385 Individual Voluntary Arrangements (IVA’s) down 8% and 6788 Debt Relief Orders (DRO’s) which represents a 20.3% increase on Q1 2010. Figures for Scotland showed an 18% decrease to 4262 insolvencies in the quarter, while numbers rose by 25% in Northern Ireland.

While the figures may look encouraging, they are still high historically, being double the rate seen in 2005. In addition individuals still face considerable financial challenges in 2011 such as rising fuel and food costs and increased National Insurance contributions from April meaning that the trend is unlikely to continue downward. These figures show that employers still need to remain vigilant and continue to carry out employee credit checks on all employees. Only by doing this can employers devise effective strategies to help any employees in financial difficulty and demonstrate to auditors and their customers they are taking a risk based approach to protecting their business.