UK Personal Insolvencies Down

UK economic newsPersonal Insolvencies at Five-Year Low (UK)
With the world economies so vitally linked, insolvency has become a problem on a much more global scale. That’s why when the latest official figures in the UK reported that personal insolvencies in the first quarter of 2013 hit the lowest they had been in 5 years, the world listened. Although, these numbers shine a light of hope that the economy is being resilient, it doesn’t mean things are stabilizing yet.

Not on the Rebound Yet
Personal insolvencies may be down in the first quarter of 2013 for England and Wales over 2012, however creditor initiated bankruptcies are up. Additionally, the debt pattern is also shifting. While consumers struggle to pay their unsecured debt, they are falling behind in other areas like utilities, council tax, and rent. These debts are simply being extended and not figuring into the insolvency numbers since they are not part of the bankruptcy and IVA’s statistics.

There are also those who are leveraged to their max and just barely making all of their payments. These are the consumers that are on the brink of falling into the insolvency crisis if interest rates rise.

Even though consumers have seen the onset of the “Credit Boom”, it is still working its way through the economic system and that is why it is vital that households receive financial breathing room to get their debt under control.

A Long Way to Go
Despite the fact that personal insolvencies are at a five-year low in the UK, the world economies still have a long way to go. This improved indicator should be seen as a sign that maintaining low interest rates and working to stabilize unemployment are helping consumers regain control of their out of control budgets, yet should not be seen as an indicator that the economy is on the rebound.

For a more in-depth look at the figures, check out this article at The Guardian.

Philip

5 Comments

  1. It seems things are getting better no doubt but you’re spot on about having a long way to go yet

  2. What are the long term chances of the UK ending up in the same situation that Greece was just in? And is this insolvency problem caused by a poor economy or government overspending?

  3. Interest rates may be low, but I don’t think it’s really the sign of an improving economy. I think it’s the result of a government effort to increase buyer confidence, which they are hoping will improve the economy. I really don’t know what’s wrong with people’s minds these days, but I feel like this plan is going to backfire.

  4. “While consumers struggle to pay their unsecured debt, they are falling behind in other areas like utilities, council tax, and rent.” Spot on! I think so many people are in deep debt nowadays, everyone struggles and we still have a lot more to go to get out of this never-ending circle.

    • I think part of the problem is the economy, and another part is that people are spending money they don’t have. And unfortunately it often seems to be on things they don’t really need. I mean, I’m not attacking people who are struggling but I do think sometimes they make their situation worse by not looking at their spending habits and making adjustments.

      I know hearing that is not going to please some people, but I think we all need to be honest with ourselves. When I realized that I was in financial trouble, the first thing I did was make a spending plan and cut out all the things I didn’t really need. Things like cable TV for example.

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