R3 Scotland: 80% of insolvency practitioners expect personal insolvencies to rise
Over five in six (86.1%) respondents to an R3 survey of insolvency professionals in the UK say they expect personal insolvency numbers to increase over the next year, with a significant proportion expecting a rise as early as this autumn.
The research highlights that two in five of respondents (41.6%), all of whom work in personal insolvency, expect the numbers to be significantly higher than last year’s figures, while 44.6% think they will be somewhat higher than in 2019.
Of those who predict a rise in numbers, the majority (61.5%) expect the increase to happen between October and December of this year. Three in ten (30.6%) think it will occur between January and March of 2021, while just 3.4% expect the increase to come between July and September of this year.
When asked to predict which debts would be the most common triggers for people seeking personal finance advice or insolvency solutions over the next 12 months, three quarters (74.2%) of respondents said personal debt related to business failure, half (50%) said credit card debt, and 35% said unsecured bank loans or overdrafts.
Tim Cooper, R3 Scotland chair, a partner at Addleshaw Goddard, said: “The government has introduced unprecedented levels of support for individuals since the start of the pandemic, and a number of financial services providers have also taken steps to help financially challenged consumers, including offering increased forbearance and payment holidays.
“This has meant that the number of people considering a personal insolvency process or asking for advice around one has not risen as sharply as we might have expected during the current circumstances.”
She added: “These support measures are temporary, however, and do not cover everybody. When they come to an end, a number of people are likely to find themselves in financial difficulty.
“With concern around future unemployment levels rising, and borrowing conditions returning to more usual patterns, it is vital for anyone in financial distress to seek out high quality advice from a qualified provider. R3’s message to anyone whose budget is under pressure is not to wait until matters come to a head, as the sooner you get advice, the sooner you can start to improve control of your financial situation.”