According to official figures, the number of people facing insolvency is set to reach the highest level for almost a decade, following an annual increase of more than 22 per cent in December.
The figures showcase the ongoing problem many British households are facing from mounting debts, with the number of personal insolvencies climbing to 30,879 in the three months to the end of September, a figure up from 25,169 in the same period the previous year.
The Insolvency Service figures revealed that the total number of personal insolvencies over the first nine months of the year has reached 93,042 after hitting 115,319 for the whole of last year.
Should there be another quarter this year above 30,000 the total would reach the highest since 2010, when the total number of personal insolvencies reached 135,045.
Duncan Swift, President of the insolvency and restructuring trade body R3, said the figures provided a worrying insight into the state of personal finances
He said: “The economic and political turbulence of the last 12 months has taken its toll on businesses. Although real wages have hit a recent high, they are still lower than they were before the financial crisis. Unemployment may be low but it’s not necessarily secure for everyone.”
Insolvencies are also increasing at company level. Following three consecutive quarters of increases the number of company insolvencies in the three months to the end of September was 4,355, up 1.6 per cent on the same quarter the previous year.
However, officials believe that the underlying trend has been distorted by bulk insolvencies that occurred in several quarters over the last three years after clampdowns by HMRC on the tax paid by personal corporations. The tax changes have forced many one-person companies out of businesses, increasing the number of insolvencies in a single quarter.