Personal insolvencies up by alnmost 25%
Monday, 08 February 2010 11:30
By myfinances.co.uk staff
Personal insolvencies in the last quarter of 2009 were almost 25% higher than the same period a year ago, the latest official figures show.
The Office of National Statistics said there were a total of 35,574 individual insolvencies made up of 17,007 bankruptcies and 13,219 Individual Voluntary Arrangements (IVAs). While bankruptcies were down 5.5 per cent on the same quarter last year IVAs had shot up by 26.3%, the ONS said.
There were also 5,348 Debt Relief Orders (DROs), a similar arrangement to bankruptcy for debtors who owe less than £15,000 which last for a year.
The vast majority of bankruptcies (84%) were made voluntarily by the debtor, slightly down on the three previous quarters, but comparable with 2008 as a whole, the ONS said.
The percentage of bankruptcy orders involving trading debts (self-employed bankruptcies) was 12.4% in the third quarter of 2009, which was a decrease from the previous quarter, but comparable to the level in 2008 as a whole.
Tim Moss, head of loans and debt at comparison website moneysupermarket.com said while the recession may be over in statistical terms it would be some time before the public began to feel as if it were truly over.
He added: "Today's figures may make grim reading but I fear they don't tell the whole picture - they do not include those entering informal debt management plans which could grow by up to 30 per cent in 2010, putting another potential 300,000 consumers in the 'can't cope' category.
"Clearly it's not enough to talk ourselves out of a recession. Some may argue that it was the all too easy availability of credit that got many debt-ridden borrowers into their current financial situation mess, but unless the banks start lending again allowing consumers to switch from expensive products to cheaper ones, this rise in insolvencies will surely continue.
"Consumers need to ensure they take their financial situation into their own hands, and contact debt counselling charities such as the CCCS or the Citizens Advice Bureau if they find themselves in difficulty."
Comments
Newsletter sign up