Women are getting more prone than men to see their finances worsen so badly that they become broke, official numbers reveal.
The proportion of female insolvencies across England and Wales first passed that for men in 2014 – and after then the insolvency gender gap has grown.
Women were more prone than men to take out a kind of insolvency called an Individual Voluntary Arrangement (IVA) – an arrangement in which money is given out to creditors, this is the first time, recorded in 2016.
Women had a percentage of 10.9 IVAs per 10,000 people last year, while for men the rate was 10.6, numbers published by the Insolvency Service reveal.
Debt relief orders (DROs), which are usually called “bankruptcy light” as they endeavour at people with moderate amounts of debt which they cannot repay, are another formal kind of insolvency which females have been more likely than men to take out after they were first introduced in 2009.
However, the third official type of insolvency maintains that men are still more likely than women to go insolvent.
A big difference in the rate between the two genders can be seen iIn 2016 when women had an overall bankruptcy rate of 20.6 per 10,000 individuals, while for men the rate was 18.7 per 10,000.
While a smaller gender gap can be seen in 2014 when female insolvency rates passed that of men, the incidence was 22.2 for women per 10,000 adults and 21.2 per 10,000 for men.
Mark Sands, chairman of trade association R3’s personal insolvency board, said: “Women are much more likely than men to use a DRO, which is designed to help people with assets under £1,000 unable to pay even low value debts.
“It’s very easy to ‘over-spend’ if you don’t have much money available to you in the first place. Penalties like unauthorised overdraft charges or missed payment fees can become a problem and can keep people in a debt spiral.
“Lower incomes and employment levels mean women are more likely to be vulnerable to financial shocks and have less room for financial manoeuvre than men.”
Mr Sands stated that men are more likely to be influenced by bankruptcies, which can be utilised to deal with greater value assets or liabilities – seldom associated with a company failing or the loss of a job.
He added: “Given men are more likely to own their own business or be in full-time employment, it’s not a surprise that men use bankruptcy more.
“With a growing economy, bankruptcy numbers have been dropping steadily since 2009-10, which has helped insolvency rates fall faster in the medium-term for men than women.”
The constant change in the role of women in the society and the economy is also an indicator, he said, as women’s work and income levels have risen.
If women entrepreneurship increases, this could also lead female bankruptcy levels more into range with those for men as more women have their own company, he advised.
Mr Sands said another “key factor” why women are now included in more insolvency is that the liquidation process itself has become more effective at dealing with different types of debt difficulties.
He stated: “This has made insolvency numbers more accurately reflect existing financial inequality between men and women.”
Alec Pillmoor, an insolvency partner at RSM, gave importance to a rise in the rate of younger grown-ups going insolvent.
He stated: “For this new generation of borrowers who have never experienced a rate rise, the concern is that many are not budgeting for the potential increased costs of repayments on loans, mortgages and car finance deals.
“With the prospect of a rise as early as this year, this could spell trouble.”