New data released by the Insolvency Service shows that, for the first time since records began, more women than men are now filing for personal insolvency. The figures, which cover statistics in England and Wales in 2014, reveal that 22.2 women in every 10,000 became insolvent last year, compared to 21.2 per 10,000 for men.
The overall rates for both genders are still dropping year on year, but a sharp dip in the number of male insolvencies has caused female applications to overtake. Other figures from the Insolvency Service report include:
• The total number of insolvencies in 2014 was 51,472 for women and 46,758 for men
• The biggest male/female divide was in the 25 to 34 age group, with 32.8 per 10,000 women in this group declaring insolvency compared to 24.8 men per 10,000
• The only age groups where more men than women became insolvent were 55 to 64 and 65 plus
• Across both genders, the ‘peak’ age group for insolvency is between 35 and 44
• London and the south east of England have the lowest insolvency rates, whilst the highest number tend to be in areas with seaside resorts.
So what’s caused the big increase in female insolvencies? Andy Gorton, owner of debt advice service, Bankruptcy Clinic, explains: ‘According to the Insolvency Service, part of the trend is due to a rising proportion of women turning away from traditional bankruptcy and using alternative solutions such as IVAs and DROs (see below) instead, to deal with relatively small consumer debts. Another reason could simply be that women are taking more financial responsibility within the household these days, which unfortunately includes having to deal with any unpaid debts run in their own names.’
So what are your insolvency options?
If you live in England or Wales and think that insolvency might be the best way of dealing with your debts, there are three options that may be open to you.
1. Declaring bankruptcy
As the Insolvency Service report shows, traditional bankruptcies are becoming less common as more flexible options are now available. According to the insolvency trade body, R3, men are still more likely to become bankrupt than women and often for more serious issues such as unemployment or company failure.
The upside to declaring bankruptcy is that, in most cases, you’ll be discharged after 12 months and you’ll have immediate legal protection from your creditors as soon as your Bankruptcy Order is in place. However, you could lose your home or any valuable assets that you own and you’ll also be subject to limitations and restrictions regarding employment and holding certain public offices.
On top of this, you may have to make one-off or regular payments to your creditors for up to three years. So there are quite a few pros and cons that you’ll need to weigh up before deciding to go ahead.
2. Individual Voluntary Arrangement (IVA)
An IVA can be a good alternative to bankruptcy if you own your home, as you won’t normally be required to sell it. However, you may have to re-mortgage or release some equity during the IVA.
A legally-binding solution for both you and your creditors, an IVA can only be used to deal with unsecured debts such as credit cards, personal loans and overdrafts. You’ll need a minimum amount of disposable income with which to repay your creditors each month, usually for five years. After this time, any remaining unsecured debts will be written off.
An IVA doesn’t have as many restrictions as traditional bankruptcy, but it will affect your credit rating and your ability to get credit in the future. You must make all your payments on time and meet the other conditions imposed by the IVA – or you could end being forced into bankruptcy.
3. A Debt Relief Order (DRO)
Sometimes referred to as ‘bankruptcy light’, a DRO may be an option if you owe less than £15,000 (£20,000 from October 2015) and have little or no income or assets. There are a few other criteria you must also meet, so not everyone is eligible for a DRO.
However, if your DRO goes ahead, you’ll have a moratorium placed on your debts, usually for 12 months, during which time you won’t need to make any repayments, and interest and charges won’t accrue. You’ll also have legal protection from your creditors.
When the moratorium period comes to an end, your debts will be written off if your finances haven’t improved. However, if your creditors think that your circumstances might get better in the near future, they may apply to have the DRO extended or cancelled altogether. In the latter case, you’d have to revert to your original repayment terms.
Not sure where to turn? Ask Bankruptcy Clinic
The right way to manage your debts and regain control all depends on your individual circumstances. The expert team at Bankruptcy Clinic are here to help you find the right answer. Our friendly advisers will take a few details to ascertain which solutions might be available before talking you through your options.
Contact Bankruptcy Clinic today
It’s free to call us from a landline on 0808 168 7389 or on 01625 462 770 from a mobile. Or why not ask us a question online and we’ll get back to you as soon as we can?