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New figures show the leading causes of insolvency in 2015

Authored by Phil Meekin

Phil Meekin

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Approximate read time: 2 minutes

At the end of 2016, insolvency trade body R3 released findings into the leading causes of insolvency in 2015 with living beyond means, reduced income levels and relationship breakdowns amongst the top causes.

The figures show not only the reasons why people enter into insolvency but also the clear differences between why men and women enter into bankruptcy. However, these figures only deal with bankruptcies, not any other personal insolvency procedure and it is worth being aware that those statistics may point towards a slightly different trend than what is shown below.

In 2015, 26% of bankruptcies where related to trading problems, such as the bankrupt’s company running into trouble, this is a 1% increase on 2014. Of the total bankruptcies for 2015, trading problems accounted for 3005 bankruptcies for men (34%) and 795 bankruptcies for women (13%) showcasing that men’s finances are significantly more affected by the business they own/work for than the finances of their female counterparts. However, this does not take into account or showcase the current numbers of men and women who are self-employed.

However, it was non-trading problems that had a significant impact on the finances of those who went bankrupt accounting for 5915 bankruptcies for men and 5180 bankruptcies for women. For both, the most common cause of bankruptcy was living beyond their means with 995 bankruptcies for men and 1110 for women.

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That is where the similarities end however as the second and third most common non trading bankruptcy causes for men are work related and those for women are more personal/household related. For men, 990 bankruptcies were caused by management failure and 920 were caused by a loss of job for the bankrupt; in contrast for women, 1075 bankruptcies were caused by a relationship breakdown and 750 caused by a significant reduction in household income.

These findings again point to the importance of work on the finances of men whereas for women their financial security comes from maintaining steady finances in their household. R3 spokesperson Cathy Williams agrees in her comments on the findings; “The notable thing about the statistics is the different financial situations men and women face. For men, it’s often the failure of their business or the loss of their job that leads to this situation.

“On the other hand, women’s bankruptcies are disproportionately linked to relationship breakdown or a fall in household income…. Careful budgeting and seeking early professional advice – rather than getting deeper into debt – can help.”

Despite these figures, the number of bankruptcies have fallen steadily over the course of recent years, as have the number of insolvencies in general. This has been put down to changes in the economy and the increased uptake in other personal insolvency procedures such as Individual Voluntary Arrangements (IVA) and Debt Relief Orders (DRO).

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