According to recent figures published by accountancy firm RSM Tenon, gender equality has finally reached the debt sector – albeit in a sad way. Based on the company’s annual insolvency report, female bankruptcies now account for 48% of all individual insolvencies in the UK, a record since RSM Tenon began collecting related data four years ago. In 2010, almost fifteen thousand women applied either for bankruptcy or associated services like individual voluntary arrangements or debt relief orders. What makes these numbers so remarkable is that other reports – not conducted by RSM but mentioned in their press release – indicate that at the beginning of the new millennium, the division was still roughly 70%-30% in women’s favour. The sharpness of the rise is alarming and points towards an important question: Is this merely a temporary hike or a harbinger of a deeper, more long-term problem?
Truth be told, female bankruptcy has already been in the spotlight for several years. Most recently, the topic surfaced when pop-stars were seemingly awarded special treatment by the Insolvency Service, who allowed them to reside in an expensive mansion and continue living their luxurious lifestyle. Since then, many fear, bankruptcy has become associated by some as an easy way out of debt or even a “soft option” without serious repercussions. Which clearly sets the wrong incentives. After all, an insolvency is still very much a last resort with heavy financial consequences for years to come.
And yet, the debate may have diverted attention from the far more urgent fundamentals of the issue. Mark Sands, Head of Personal Insolvency at RSM Tenon, had a variety of long-term explanations to offer: “The recent rise in the proportion of female insolvencies began in the second quarter of 2009 and the figures have climbed steadily ever since. So, arguably the UK’s recent financial crisis has hit women’s pockets harder than men’s.“ Sands stressed that, in the early part of the recession, more women than men were made redundant and that many government-imposed spending cuts have hit single parents particularly hard – most of which by far are female.
In itself, the gradual levelling-out of female and male bankruptcy figure does not necessarily represent a threat, according to the Debt Advisory Line’s Craig Gedey: “In a time when, commendably, more women than ever are building a career for themselves and taking on financial responsibility, the relative percentage of them being offered loans will naturally rise – and so will the numbers of them facing financial difficulties as a consequence.“ What he was worried about, said Gedey, was whether or not those in need of good advice knew where to turn to: “Women with debt problems should ask for sensible debt help before even considering insolvency. Usually, there are far better alternatives than bankruptcy available to all sides involved – including, for example, a sensible debt management plan agreed upon by both creditors and debtors.“