Personal insolvencies jump 28.2%
Friday, 06 November 2009 12:00
Personal insolvencies soared 28.2 per cent to a record high in the third quarter of 2009, compared to the same period last year.
According to the Office for National Statistics (ONS), there were 35,242 individual insolvencies in England and Wales in the last quarter, the highest level since records began in 1960 as the recession takes its toll.
"Unfortunately, it is highly likely that individual insolvencies will continue to rise for some time to come, despite current mounting signs that the economy will finally return to growth in the fourth quarter," said Howard Archer, economist for Global Insight.
"Unemployment has already risen substantially and is likely to climb significantly further, many people are suffering wage freezes or even cuts, debt levels have risen and credit conditions remain very tight."
The insolvencies were made up of 18,347 bankruptcies, 12,390 Individual Voluntary Arrangements (IVAs) and 505 Debt Relief Orders (DROs).
A DRO is an alternative to bankruptcy, which came into force in April this year.
Falling property prices have also removed another important source of raising revenue for some, said the director of debt solutions firm IVA.com, Terry Balfour.
"When property prices were buoyant the strategy of using equity to fulfill the terms of the contract was a viable option for many people signing up to an IVA.
"But since then, the unforeseen drop in house prices has removed this vital safety net for many and they face renewed misery just at the time when they thought the end of their arduous journey was in sight," he said.
There was slightly better news for companies, with 4,716 company liquidations, down 4.7 per cent quarter-on-quarter.
Firms going bust in the third quarter of the year was still 14.6 per cent higher than the same period in 2008, however.
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