The statistics show that most personal insolvencies are not business related. In fact in  2016–17, 82% of debtors entering personal insolvency did so due to non-business related causes.  The most common non-business related causes were:

• excessive use of credit (8,870 debtors)
• unemployment or loss of income (8,035 debtors)
• domestic discord or relationship breakdown (3,222 debtors)

The remaining 18% of debtors entering personal insolvency did so due to business related causes. The most common were:

• economic conditions (1,779 debtors)
• personal reasons, including ill health (471 debtors)
• excessive drawings (310 debtors)

Excessive use of credit is now the most common non-business related cause of personal insolvencies, overtaking unemployment or loss of income.

In 2016–17, the 8,870 debtors entering personal insolvencies due to excessive use of credit facilities including losses on repossessions, high interest payments and pressure represented 35% of all debtors entering non-business related personal insolvencies. Previously (from 2007–08 to 2015–16), unemployment or loss of income was the most common non-business related reason for debtors to enter personal insolvencies.

Economic conditions remains the most common business related cause of personal insolvency

In 2016–17, 1,779 debtors entered business related personal insolvency due to economic conditions affecting industry, including competition, credit restrictions, falls in prices or increases in cost. This was 31% of all debtors entering business related personal insolvencies.

Economic conditions was the most common business related cause of debtors entering personal insolvencies in every year since 2007–08.

For further information, please contact ERA Legal.