The rising tide of female insolvency

A new analysis of Government figures shows that for the first time, more women in England and Wales are set to declared insolvent* than men.  And in 2011, two thirds of insolvencies among 18-24 year olds were women.

Our analysis of Insolvency Service data revealed that women represented only 30 per cent of insolvencies in 2000.   By 2011 (the latest figures available) that number had risen to 49 per cent overall.

An extrapolation of the trend data shows that the numbers of men and women in formal insolvency will have been broadly equal in 2012, with women projected to outstrip their male counterparts in 2013.

A particularly worrying picture for the future emerged when insolvencies in 2011 were analysed by gender and age.  The data showed that younger women (up to the age of 24) are much more likely to be declared insolvent than other female age groups. 

In the 18-24 age group, two thirds of insolvencies (66 per cent) were female.  That percentage fell to 54 per cent for women aged 25-34, then 48 per cent for 35-44 year olds, 47 per cent for those aged 45-54 and 45 per cent for 55-64 year olds.

Analysis of the 2011 figures also revealed significant differences in the type of insolvency that men and women were entering.

Almost 32 per cent of women opted for a Debt Relief Order (DRO), which is available to people with unsecured debts of under £15,000 and low disposable incomes (after essential household expenditure, less than £50 a month).  By comparison, just over 17 per cent of men chose this route. 

Debt Advice Foundation chief executive David Rodger commented: “Our analysis of the Insolvency Service’s figures shows clearly that insolvency amongst women has been rising steadily and will overtake men this year.

“The high level of insolvencies among younger women is particularly worrying, as there is a clear trend here.

“The reasons for that trend, however, remain unclear.  We could be seeing the fallout from a continuing gender pay disparity, or women could well be tackling their debt problems at an earlier stage than men.  And ur experience is that women are more likely to pick up the phone and ask for help than men.

“What we know for certain is that a generation ago it was difficult for a woman to get any kind of a loan, and married women would routinely be expected to ask their husbands to co-sign a hire purchase agreement. 

“Today by contrast short term loan companies are targeting young women ruthlessly, with marketing campaigns suggesting that they have an entitlement to a wide range of non-essential consumer goods, whether they can afford them or not.”

Low levels of financial education in schools also added to the problem, David Rodger said.

“Young people are not being taught the basics of working out a personal budget; they are not being given the tools to help them understand their own financial position.  And without this knowledge, they are more susceptible to unscrupulous marketers and struggle to deal with today’s complex and confusing financial landscape.”

*Insolvency figures include bankruptcy, Individual Voluntary Arrangements and Debt Relief Orders