One in six bankrupts declaring assets have over £50,000
One-in-six (15%) people who declared their assets when entering bankruptcy in 2016-17 had assets worth more than £50,000, according to research carried out by R3, the leading insolvency trade body.
Data provided by the Insolvency Service also revealed that 60 people entering bankruptcy in 2016-17 declared assets between £500,000 and £999,00, whilst 26 had assets worth more than £1m.
The number of wealthy individuals becoming bankrupt may actually be much higher, as they may have spent considerable amounts trying to fight their bankruptcy or they may have attempted to transfer assets to others or overseas, despite the likelihood that those assets will be traced and clawed back in bankruptcy. In addition, over a third (38%) of individuals entering bankruptcy do not declare their level of assets.
Of 99,196 insolvencies in 2017, 15,082 were bankruptcies. Bankruptcy numbers most recently peaked in 2009 when there were 74,671 bankruptcies out of 134,143 insolvencies. Since then the number of bankruptcies has decreased, largely due to a general improvement in the economy, along with a new ‘Debt Relief Order’ (DRO) which has created a new option for people with few assets and a relatively low level of unaffordable debt.
The most recent detailed figures released by the Insolvency Service show that, of those bankruptcies caused by reasons other than the bankrupt person’s business, the greatest proportion were listed as “living beyond means”, at 2,105 cases. The next most common reasons were “relationship breakdown” (1,715) and “significant reduction of bankrupt’s income” (1,515). For individual bankruptcies which were related to the bankrupt’s business (3,800 altogether), the most commonly-given reason was “management failure” (1,150), followed closely by “loss of market” (1,140).
Bankruptcy is a personal insolvency procedure where an individual’s assets may be sold by a trustee to raise money to repay creditors. Bankrupts face restrictions on borrowing money or acting as a director, typically for a year. After a year, the bankrupt is discharged with their remaining debts written off. People can apply to enter bankruptcy, or, if they owe more than £5,000 to one creditor, their creditors can ask a court to make a bankruptcy order.
We often see cases where someone who is struggling with debt problems has put off taking advice until the last minute or waited until they have been made bankrupt before seeking help.
Financial problems can happen to anyone, no matter how apparently wealthy they are. The reasons can range from unexpected business problems, to health issues or marital breakdown.
The most important thing is to be realistic about your financial position and seek help as soon as you can see that things are getting out of control. The sooner you seek help, the more options will be available and more palatable those options will be.
For advice on your business or personal financial position, call us today on 0114 285 9500. We can help.