MORE than two-fifths of debt experts questioned by insolvency and restructuring trade body R3 believe that personal insolvency numbers will increase significantly in the next 12 months.
Over eight in ten respondents to an R3 survey of its members who work in personal insolvency said they expected the numbers of cases to increase within the next 12 months, with 41.6 per cent of respondents expecting them to be significantly higher than last year.
A further 44.5 per cent expect personal insolvency numbers to be somewhat higher than 2019, while 74.2 per cent say that personal debt relating to business failure is likely to be the most common trigger for personal insolvencies arising.
Half, 50 per cent, said credit card debt was likely to be a trigger, while 35 per cent highlighted unsecured bank loans or overdrafts.
Of those who expect personal insolvency numbers to rise, almost two-thirds, 61.5 per cent, expect it to happen in the final quarter of this year, with a further three in ten, 30.6 per cent, thinking it will in the first three months of 2021.
Alexandra Withers, North-East chair of R3 and an associate solicitor in the insolvency department of Short Richardson & Forth Solicitors, urges businesses to seek advice before it is too late.
She said: “The Government has introduced unprecedented levels of support for businesses and consumers since the start of the pandemic, and a number of financial services providers have also taken steps to help financially challenged consumers, for example through 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 may have expected.
“But measures are temporary and do not cover everybody. When they come to an end, people are likely to find themselves in financial difficulty if budgets have taken a hit due to the pandemic.
“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.
“Getting on with introducing the breathing space would provide anyone who is unable to pay their debts with time to develop and agree a sustainable approach to managing them, and would hopefully also encourage more people to seek reliable, professional advice about their debts."