A record number of people in Northern Ireland are having to take drastic action to manage their debt, with almost 11 individuals per day declaring insolvency over the last three months.
There were 975 individual insolvencies, which includes bankruptcy, between July and September showing the province is still struggling to recover from the recession.
This is up more than a third (36%) on the third quarter last year. In contrast, individual insolvencies in England and Wales fell by less than 5%.
Ian Finnegan, director at ASM Accountants in Newry, said: “The numbers show that individual insolvencies for quarter three were the highest they have ever been.”
Stephen Cave, partner in PwC’s Northern Ireland business recovery service team, speculated that the rise may be down to the record low interest rates: “There’s been a lot of speculation that interest rates are not going to sit much longer at their rock-bottom 0.5% low, so some people may be taking the view that addressing their debt problems now is better than waiting till interest rates drive up the size of their debts or impacts on their disposable income.”
The number of individual voluntary arrangements (IVAs) has rocketed by 68% in the third quarter of 2014, with 549 people taking this option to manage their debt. That is up nearly 70% on the same quarter last year.
Individual bankruptcies also went up by 20% year-on-year, with 303 debtors declared bankrupt.
Northern Ireland has a greater problem dealing with debt than the rest of the UK, with 27% of the population over indebted, compared the UK average of 18%, according to Money Advice Service.
Citizens Advice dealt with 33,000 individual debt issues in Northern Ireland across their bureaux in 2013/2014.
In a warning for what’s to come, Kathy McKenna, money advice programme co-ordinator at Citizens Advice, said: “We expect to helping many more clients deal with debt over the next number of years.
“Citizens Advice are experiencing an increasing number of clients presenting for advice with debt, not only from clients who have experienced a change of circumstances such as redundancy, but also those who have been struggling over the last number of years.”
Angela McGowan, chief economist at Danske Bank, said individual bankruptcy has traditionally been associated with females aged 25-40 who have typically overspent on credit cards but since 2007 there has been an increase from people who are self-employed.
- There were 975 individual insolvencies in quarter three 2014.
- This was an increase of 36% on the same period in 2013.
- 303 of these were bankruptcies, up 20% year on year.
- 549 were Individual voluntary arrangements (IVAs), up 68% year on year.
- 123 were debt relief orders (DROs), down 11% year on year.