Personal Insolvency Levels Hit Record Highs

Tue, 10 Nov 2009

The number of people declaring themselves bankrupt in England and Wales reached a record high in the last quarter as consumers continued to struggle to service their debts, new data has revealed.

Latest statistics from the Insolvency Service show that some 35,242 people filed for insolvency between July and September, up by 28.2 per cent compared with the same period last year and 6.6 per cent on the previous quarter.

The insolvencies were made up of 18,347 bankruptcies, 12,390 Individual Voluntary Arrangements (IVAs) and 4,505 Debt Relief Orders (DROs) – an increase from 1,978 in Q2.

DROs were introduced earlier this year to ease the financial strain for those on lower incomes (no more than £50 a month surplus) and with debts of no more than £15,000.

According to Mark Sands, national head of bankruptcy at Tenon Recovery, more than 107,000 people have been declared bankrupt or entered an IVA or DRO so far this year - higher than for any full calendar year on record.

Mr Sands said: "I have been stunned by the level of personal insolvencies - we have sailed past the previous record and still have more than two months of the year to go.

"At this rate we expect to see as many as 130,000 personal insolvencies over the whole of 2009, an increase of 22 per cent on the levels seen in 2008."

Mr Sands blamed the growing rate of personal insolvencies on rising unemployment driven by the ongoing recession and record levels of borrowing .
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