Debt Struggles Highlighted As Insolvencies Hit Record Hit

Fri, 07 Aug 2009

A record number of people in England and Wales were declared insolvent in the second quarter of the year, new figures from the Insolvency Service have revealed.

Individual insolvencies soared to 33,073 in the three months to the end of June, the highest level since records began in 1960, as consumers struggled to keep on top of their debt repayments .

The figure represents a 9 per cent jump on the previous quarter and a 27.4 per cent increase from the same period last year.

Personal bankruptcies in Q2 stood at 18,870 - 8 per cent lower than during the previous quarter, but still 15 per cent higher than in the same period of 2008.

According to the data, the number of Individual Voluntary Arrangements (IVAs) entered into during Q2 rose 27.4 per cent year-on-year, bringing the total figure for the first half of 2009 to 23,000.

There was also a keen uptake in New Debt Relief Orders (DROs) in the second quarter, with 1,978 Brits applying for the orders which aim to offer a cheaper alternative to bankruptcy for people on low incomes and with debts of less than £15,000.

Alan Tomlinson, of UK licensed insolvency practitioners Tomlinsons, said: "We have the perfect storm of rising unemployment and unmanageable debt . Many of the people we're seeing are in serious, serious difficulty."

"The rise in the number of IVAs is a real cause of concern and reflects the increased marketing activity of the IVA providers ."

"People need to be very wary of entering into an IVA, as in many cases it simply isn't the right solution. Other options such as bankruptcy may be more appropriate."
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