One of the country’s leading insolvency practitioners warns more people are choosing to enter an insolvency process as the cost-of-living crisis bites hard.
The warning comes as latest monthly insolvency statistics for October 2022 reveal bankruptcies (up 11%) and Individual Voluntary Arrangements (IVAs, up 18%) both increased compared to the previous month.
Compared with two years ago, the number of IVAs in October was up 32% – an enormous increase as individuals continue to deal with the ever-growing debt crisis.
Jonathan Amor, Insolvency Partner at Azets in Yorkshire, the UK Top 10 firm, said: “All forms of personal insolvency, where a debtor chooses to enter a process, increased in October. This is sad evidence that the cost-of-living crisis is starting to bite really hard, and individuals are feeling they have no alternative but to enter bankruptcy.
“Unfortunately, these numbers are likely to continue to increase as the living and tax burdens rise, companies continue to enter insolvency with the inevitable redundancies that follow and the sheer fatigue that comes with carrying a continual burden of debt.
“With Christmas approaching, it won’t be surprising if many families scale back their Christmas spending and have no option but to focus on essentials instead.
“This will of course affect the high street and the ramifications of reduced consumer spending on non-essential items will ripple through to the retail sector. There is the potential for a spiral increasing debt to occur which families may struggle to recover from.”