Recent figures from the Insolvency Service, published at the end of April, indicate that the numbers of people beginning personal insolvency proceedings rose to the highest level for three years in the first quarter of 2017.  24,531 people went insolvent at an increase of 6.7% from the last three months of 2016. The figures are startling – according to The Money Charity 248 people a day are declared insolvent – that is at a rate of one person every 6 minutes and 13 seconds. 

This perhaps is no surprise given the financial pressure which faces UK households, largely due to a rising rate of inflation which is not reflected in a rise in salaries. This, in turn, leads to a rise in consumer debt, either on credit cards or pay day loans. These recent figures would tend to suggest that there are increasingly less families who are “just about managing”.

There has been a steep rise in individual voluntary arrangements (“IVAs”), an insolvency proceeding which, as the name suggests, allows debtors to enter into binding arrangements with their creditors to repay an agreed proportion of their outstanding debts. These were up 12.5% from Q4 of 2016.

Bankruptcies have also risen – it is thought, in part, this rise can be accounted for by the fact an individual can now commence bankruptcy online, without having to file a petition at court.  Fees to commence bankruptcy have increased but as these can now be paid in instalments, this may also have contributed to the growth.

These figures alone tell us little of who is applying for personal insolvency and what their circumstances might be. So to come back to the title of this piece – is there an unspoken gender issue when it comes to personal insolvency?

The main causes for women becoming insolvent are usually (in descending order) the breakdown of a relationship, living beyond their means and the loss of household income (often connected to the first reason stated). For men, the reasons are usually job loss, business failure and living beyond their means.

These reasons give a fascinating insight into the wider economy and the gender nuances within it.  Generally speaking, men receive their economic stability from their employment and work; whereas women find theirs in maintaining steady finances in the home.  It shows that gender stereotypes and the traditional roles of women and men persist, even in insolvency. It illustrates that women generally have lower incomes (due perhaps to more women working part-time) and lower value personal assets, thereby making the growth in consumer debt part of their cash flow problems.

Women generally tend to worry about their debts more than men, according to recent studies, even though men tend to have higher debts. In R3’s Personal Debt Snapshot surveys, conducted since 2010, they have found that women are more likely to say they struggle from pay day to pay day, which thereby increases the need for payday loans and consumer debt. The chief executive of the Money Advice Trust, Joanna Elson, has said that “Growing levels of household debt and extra pressure on budgets from inflation are a worry and we expect this to translate into greater demand for free debt advice over the rest of 2017.”

In June 2016, R3 published an interesting report entitled “Closing the Gap, Gender and the Changing Demographics of Insolvency.” This showed that for the first time, in 2013, more insolvencies involved women than men. Young women are much more likely than young men to be in an IVA. Debt Relief Orders (“DROs”) which were introduced in 2009 are overwhelmingly used by women – R3 states that 63% of DROs are initiated by women.

R3 would argue that this shows the English law insolvency regime is well equipped to deal with the differing reasons and scales of personal insolvency; indeed they state that extra insolvency options such as the DRO has lead to extra insolvencies, in part explaining the recent upturn in the number of reported insolvencies. The “Closing the Gap” report says “the insolvency regime has become much more sensitive to different kinds of problem debts and circumstances; and this has helped women much more than men.”

For either gender, the key in the event of personal cash flow and debt problems is to seek advice and seek it early so as to receive the necessary help, to ideally avoid becoming one of these insolvency statistics going forward.