Are women more likely to enter individual insolvency?

According to the latest reports by the insolvency service, the gender gap is widening for individual insolvency. In 2018, women are more likely to enter a personal insolvency procedure, signifying a growing trend in women addressing their debt issues. However, the individual insolvency trends suggests a gender insolvency gap, so here we look at what possible factors may contribute to the rates.


Women are statistically more likely to enter insolvency

As mentioned above, the latest individual insolvency figures – released by the Insolvency Service – suggest the gap between men and women entering the procedures has widened. The growth in the number of women filing for personal insolvency has been steadily increasing since 2014.

In the latest insolvency report, looking at April to June of 2018, the total number of individual insolvencies has continued to rise. Today, it is at its highest since Q1 in 2012. The overall increase was driven by to the record high of people applying for individual voluntary arrangements (IVA). The number of IVAs accounted for 62% of the overall individual insolvencies, with debt relief orders attributed to 24% and bankruptcy 14% of total insolvencies.

To add to the above, the female IVA rates reached 13.3 per 10,000 adults, compared to 12.3 in males. The gender gap of 1.0 is still widening, up from 0.3 over last year. Historically, males had a higher chance of applying for an individual voluntary arrangement, but the gender gap has noticeably narrowed since 2010 and is continuing to do so.

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What could contribute to the insolvency trends?

The insolvency figures are affected by many external factors, continuing to feed into this gender disparity. For instance, women are much more likely to work part-time. Between the months March and May 2018, the number of women in part-time employment stands at 6,291, as opposed to 2,251 men. Therefore, women are more likely to have a lower income.

Much has been said about the gender pay gap, with figures suggesting up to eight in ten UK firms pay men more than women, with an average median pay gap of 9.8%. Similarly, women are often more likely to be single parents, which can also have a greater correlation with lower income levels.

Other factors that have contributed to the overall rise in personal insolvency – for both men and women – could be due to the increasingly low employment levels. With low employment levels, or underemployment, it’s likely you would also see a rise in personal insolvency. Likewise, the recent interest rate would suggest that more people are borrowing, and thus struggling with their own finances.

If you do struggle with cash flow and are increasingly worried about the risks, we suggest seeking immediate insolvency advice with licensed insolvency practitioners. Catching the issue early may just avoid the possible consequences of an IVA or filing for bankruptcy.

Insolvency by region

Alongside the notable differences between men and women with regards to individual insolvency, we are noticing a sharp change in the number of total individual insolvencies per region. For instance, the North East now has the highest total individual insolvency rate, at 27.2 per 10,000 adults.

Looking deeper into insolvencies as a whole and, in particular, for businesses, the North East also showcases some stark figures. For instance, more than half of the North East’s professional services firms are considered to be at a higher than normal risk.

However, there could be good news on the horizon for the North East in the future. While the region has one of the highest unemployment rates in the UK, it is on the up. Over the past year, the North East closely followed the East of England with an increase in the employment rate at 1.8 percentage points.

What must you consider before entering personal insolvency?

Before entering an individual voluntary arrangement, you must seek insolvency advice from licensed insolvency practitioners. The insolvency practitioners will then outline the best possible solution for your situation, whether that involves an IVA or indeed filing for bankruptcy.

With an IVA, however, you must consider that it can last for a period up to seven years; you will be included on the insolvency register and that it can incur additional fees. On the other hand, the IVA affords an individual certain protection over assets, and places a moratorium on creditors taking further action against your estate.

We do urgently suggest you speak to insolvency practitioners regarding insolvency advice. Our business rescue experts can offer free, confidential debt management advice.

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