Women account for more personal insolvencies than men
R3 the insolvency practitioners’ insolvency body has reported that there has been a further increase in female personal insolvencies compared to men.
The gender pay gap, as well as other stereo-typical gender roles in both business and family life are said to be behind this increase. The introduction of Debt Relief Orders has also played their part in -widening the gender gap. The false assumption that the wild spending habits of women lies behind the increase can be largely debunked as traditional bankruptcy cases are still being mostly undertaken for men – the increase for women is more likely due to women’s overall weaker financial position.
The 2017 statistics report a higher percentage of women than men in England and Wales entered insolvency in 2017, continuing the trend of recent years.
The 2017 statistics show that 53.9% of insolvencies involved a woman, up from 30% in 2000 and 53.4% in 2016. There were 22.6 insolvencies per 10,000 women in 2017 compared to 20.2 insolvencies per 10,000 men. There were 21.4 insolvencies per 10,000 for all adults.
Women were involved in 65.4% of Debt Relief Orders, 53% of Individual Voluntary Arrangements, and 38.6% of bankruptcies.
DROs are used when the debt in question is small, and the indebted individual has assets under £1,000. Bankruptcy is generally associated with business failure and higher debts.
The fact that women are being persistently more likely to enter an insolvency procedure than men is following a trend that we have seen over recent years and the gap is getting wider.
The reasons for the difference between insolvency rates can be put down to several factors.
Women are much more likely than men to work part-time, and in sectors and roles with lower pay; and the ‘Gender Pay Gap’ means women are often paid less than men for performing comparable work. Women are also more likely to be single parents, which has a high correlation with greater poverty levels; and previous Insolvency Service statistics showed women were more likely than men to enter bankruptcy as a result of relationship breakdown.
The introduction of Debt Relief Orders have also had an effect on insolvency rates for women. DROs are designed to help people with low incomes, debts, and assets, and have been predominantly used by women. DROs have helped those who might not have been able to access an insolvency procedure otherwise.
The old chestnut that insolvency is often due to overspending by women was mentioned above. When looking at the whole picture however, the evidence suggests this is just not the case. The form of insolvency which is most closely linked to consumer spending, an individual voluntary arrangement (IVA), is relatively equally used by men and women.
The development of the gig economy and zero hours contracts also offers less protection from insolvency. The relatively weaker financial position is demonstrated by the split between men and women in the number of DROs.
Women tend to have a lower participation rate in the economy, with around 26% counted as economically inactive in 2017 compared with around 17% for men. People on fixed incomes, be they pensioners or benefits claimants, are more vulnerable to rises in inflation, as any increases in their incomes will lag behind real-world conditions; price rises across last year will have increased the pressures on household budgets.
If you would like any advice on insolvency please do get in touch