Personal insolvency comprises both individuals with consumer and those with business related debts, although increasingly people running their own business turn to consumer debts in their own name as the easiest way to finance small businesses.

Consumer debt levels continue to grow and are heading towards the record levels seen before the credit crunch a decade ago.  It was not therefore surprising to see overall personal insolvency levels in 2019 rising to more than 120,000, the highest level for a decade.  I expect to see that trend continue and as a result we may see more than 130,000 individuals enter into a formal insolvency in 2020.  In addition, many more people are in informal debt management plans – I welcome the Government proposals to regularise these arrangements into Debt Repayment Schemes although we will have to wait until after 2021 to see that put into place.  Also to be welcomed are the plans to introduce a Breathing Space for individuals to take advice before deciding which route they should take, however that is also likely to be early 2021 before it sees the light of day.  

Included within the headline statistics are those who have run small businesses, either as a sole trader, in partnership or through a limited company which they have helped to finance, often by agreeing to personally guarantee a loan to their company.  The number of people affected in this way is more dependent on how the economy performs generally, which of course will be affected by the outcome of the election and Brexit.  Many small business do not import or export and so may see no direct impact of Brexit, however, their position in the wider supply chain means many more will be affected, and if Brexit impacts the economy, for better or worse, then this will have an indirect effect on small businesses.

The long term trend though is for more people to set up in business and so more people are taking on responsibility for the debts of their businesses, a commendable thing to do - we come across so many entrepreneurs who are passionate about their businesses and put their heart and soul into what they do.  That does mean that, regardless of economic trends, more business-people are at risk of personal insolvency when their business faces an unexpected challenge.  We work with individuals in that position to help them find the best way forward for them and their business.  We expect to be busier in 2020 doing just that than ever before.

Mark Sands is one of the UK’s leading personal insolvency specialists. He is the chair of industry body, R3’s Personal Insolvency committee. He regularly quoted in the press on personal insolvency matters. His expertise also includes contentious insolvency and debt recovery on behalf of creditors.