A recent report commissioned by R3 has revealed not only the gender differences in the causes of personal insolvency but also ranks the popularity of the available procedures.
According to the research undertaken, men are more likely to struggle financially as a result of: (i) financial difficulties in their business; (ii) a reduction in their income; or (iii) inability to repay loans. Conversely, woman are more likely to enter insolvency as a result of the general cost of living or because they are less able to rely on their partner financially, due to either a relationship breakdown or a reduction in their partner’s income. Both genders are equally affected by over-spending.
While noting that the research reveals that for the first time women are more likely than men to enter an insolvency process, it also confirms that:
- Bankruptcy is now the least common form of personal insolvency procedure although it still affects significantly more men than women.
- Individual voluntary arrangements are now the most common and are utilised almost equally by men and women; they are often used by people with high debts (commonly consumer debt) and who have a regular income and hence are better able to make repayments.
- Debt Relief Orders (DROs) are the second most common type of insolvency procedure and are significantly more likely to involve women than men; R3’s research suggests that this could be due to women having fewer debts/assets than men, as DROs are only available where debts are of low value (now up to £20,000) and there are few assets (up to £1,000). As a result they also typically attract people on low incomes or who are unemployed. It is estimated that the future trend may be a further rise in DROs, with the debt cap having increased to £20,000 (from £15,000) in October 2015.
The research paper is available in full here: https://www.r3.org.uk/media/R3_Gender__Insolvency_June_2016.pdf
Tim Carter
Lucy Trott