Insolvencies jump 27.4 per cent

Friday, 07 August 2009 12:00

Individual insolvencies soared 27.4 per cent over the last three months as consumers struggled with debt.

There were 33,073 individual insolvencies in England and Wales in the second quarter of 2009, a 27.4 per cent increase from last year.

Individual Voluntary Arrangements (IVAs) jumped 27.4 per cent from last year, while bankruptcies rose by 15.3 per cent.

New Debt Relief Orders (DROs) also received an enthusiastic uptake, with 1,978 applying for the cheaper alternative to bankruptcy - aimed at those on low incomes.

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."

Corporate liquidations also shot up 39.1 over the second quarter compared to last year, with one in 120 companies going to the wall over the last 12 months.

Richard Fleming, UK head of restructuring at KPMG, said: "We're seeing that lenders are acting with more certainty as they appear to be taking more decisive action on individual cases. They are beginning to crystallise their losses quicker, and move on from them in a bid to begin to balance their books."

This trend is likely to carry on into the second half of the year, Mr Fleming added.

• Tags:
• bankruptcy advice
,
• loans
,
• news