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14/07/2015

Women more likely to become insolvent than men for first time – R3 comments

Commenting on the gender and regional personal insolvency statistics for England and Wales in 2014 (released today), Phillip Sykes, President of R3, the insolvency trade body, says:

 
Gender
 
“Changes to the insolvency regime mean it’s easier to deal with consumer debts and, in particular, low value debts. These changes have, for the first time, led to more women than men entering a formal insolvency process.”
 
“It may be that women are less likely to stick their head in the sand about debt problems; or it could be that low value or consumer debts have a bigger impact on women’s finances than men. Either way it is also a reflection, particularly in the under 35 age group, of women’s rapidly increasing economic activity which is closing the historic gap with their male counterparts.”
 
“According to R3 research, based on the cases they see, 85% of insolvency practitioners say consumer debt issues are a major cause of insolvencies for females, while only 75% say the same for men. On the other hand 83% of insolvency practitioners say the failure of someone’s own company is a leading cause of insolvency for men, compared to the 32% who say that for women.”
 
“The introduction of Debt Relief Orders in 2009 to help deal with low value debts appears to have had a big impact: women are far more likely than men to be in a DRO. Before DROs were introduced, many people would not have been able to meet the entry requirements for other insolvency options.”
 
“Bankruptcies, which are more likely to involve men and are often linked to ‘big bang’ personal finance issues like job loss or company failure, have fallen dramatically in the last five years, whereas the number of other types of insolvency has remained quite steady.”
 
“In the last five years, the numbers of women entering Individual Voluntary Arrangements, which are linked to consumer debts, have risen while they have fallen for their male counterparts.”
 
“The formal insolvency regime remains an effective way for helping many people deal with their debts. When appropriate, insolvency can help people get back on their own two feet and helps creditors see at least some of their money back. But these statistics don’t tell us the full story: we don’t know what is happening with the tens of thousands of non-statutory debt management plans that exist, and how these might affect men and women.”
 
“In some cases a debt management plan might be the right solution for someone, but there are too many unknowns about the scale of non-statutory insolvency options.”
 
Regions
 
“Regionally, there remains considerable variation in insolvency rates across England and Wales. The North East and South West continue to be hotspots for personal insolvencies, as well as towns on the coast. Five of the top ten highest insolvency rates are in places by the sea.”
 
“The high rates can be understood in terms of the labour markets in these places, which often have higher unemployment rates, or seasonal and short-term job opportunities.”
 
“The North East has the highest unemployment rate in the UK and is still dealing with legacy issues such as the decline of heavy industries. While the South West and many coastal towns struggle with a reliance on tourism, which as a seasonal industry can be an unpredictable provider of work.”
 
 
Notes to editors:
 
R3, the insolvency trade body, asked its members to identify the leading causes of insolvency for men and women.
 
Factors that are more likely to cause insolvencies for men than women are: 
  • Own company failure (83% of IPs said this was a leading cause of male insolvency; women 32%)
  • Job loss or reduction in income (57%; 50%)
  • Legal dispute costs (34%; 14%)
  • Unexpected bill (28%; 19%)
 
Factors that are more likely to cause insolvencies for women than men are:
  • Accumulation of consumer debt (85%; men 75%)
  • Loss of household chief income earner’s income (46%; 30%)
  • Cost of living, other than housing (23%; 11%)
  • Family-related costs (22%;8%)
  • ComRes interviewed 239 Insolvency Practitioners who are members of R3 between the 26th March and 6th April 2015. ComRes is a member of the British Polling Council and abides by its rules. Data tables are available on the ComRes website, www.comres.co.uk

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.