IVA Statistics

IVA Statistics

During 2019 almost 78,000 people started an IVA. This was the highest annual figure ever recorded and an increase of 10% over 2018.

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Overall the total number of people declaring themselves insolvent (including IVA, Bankruptcy and DRO) increased by 6% in 2019 to 122,000 (from 114,747 in 2018). This is the highest yearly amount since 2011.

IVA Statistics Table

 Qtr 1Qtr 2Qtr 3Qtr 4Total
202015,42525,285  40,710

Source: The Insolvency Service Official Statistics (Not Seasonally Adjusted)

Record Numbers of people Starting an IVA

At just under 78,000 a record number of people started an IVA in 2019. This is the highest number ever recorded in a single year. Over all, the number of people who became formally insolvent (including IVA, Bankruptcy and DRO) rose 6%.

This suggests that the number of people struggling with debt is on the increase. The first half of 2020 continues to reflect this trend.

The situation is not unexpected. Up until March 2020, employment in the UK was at record highs. However many the jobs are often lower paid or based on zero hours contracts. Huge numbers of people are earning no more than they did 10 years ago and in real terms their incomes have actually fallen.

The full impact of Corona Virus is unlikely to be reflected in the figures for the first half of 2020. Many people are currently avoiding financial difficulty due to handouts from the government and debt payment holidays. 

Why are more people using IVAs?

Since April 2014 the debt management regulatory regime has changed significantly. In particular the FCA (Financial Conduct Authority) has increased regulation surrounding the provision of Debt Management Plans (DMP).

To avoid this a number of providers have changed their business model away from DMPs. Instead they are now concentrating on marketing IVAs which remain outside the FCA regulatory regime. As a result more people have started an IVA rather than a DMP.

This is not necessarily a bad thing. One of the advantages of an IVA over a DMP is that they last for 5 years after which outstanding debt is written off. A DMP can last far longer. However an IVA is not suitable for everyone. Some may be better off going bankrupt.

Anecdotal evidence suggests many people who have started an IVA in the past 2 years would otherwise have started a DMP.

Are Personal Debt Problems Rising?

The figures are now all starting to point to the fact that personal debt problems in the UK are on the increase. Over the last few years individuals have funded their life styles by borrowing rather than earning more as wages have stagnated or fallen.

In addition in the more recent past there have been a large number of high profile business failures (Carillion; House of Fraser; Toys ‘R’ Us UK; Maplin). These have impacted a significant numbers of jobs both directly and indirectly.

These pressures are resulting in higher numbers of people in financial difficulty. It seems likely that this situation will only get worse in the short to medium term as the uncertainty posed by Brexit and global world trade tensions leave employers with little room to increase wages.