Bankruptcy rises

Nearly 18,000 people faced bankruptcy in the first the quarter of 2008.

A total of 17,931 petitions for bankruptcy were launched – a rise of ten per cent on the last three months of 2007.

Some 4,851 moves for bankruptcies came from creditors and 11,674 from debtors themselves.

Company winding up orders rose 2.6 per cent to 2,965 in total.

However, the figures represent a fall in company and individual bankruptcies recorded from a year ago.

Figures from the Ministry of Justice show a ten per cent decrease in company winding up order from a year ago, while individual bankruptcy petitions fell 13.8 per cent.

The figures will be keenly watched to adjudge any sign of the credit crunch and economic slowdown hitting Britons.

Commenting on the figures, Howard Archer at Global Insight said: "While the data are clearly weaker for the first quarter of 2008 compared to the fourth quarter of 2007, they still do not make particularly alarming reading at this stage.

"However, this is not that surprising. The economy experienced above-trend growth through 2006 and the first three quarters of 2007. Even in the fourth quarter of 2007, GDP growth was still 0.6 per cent quarter-on-quarter, which was broadly in line with trend growth.

He added: "However, the economy is now suffering markedly and looks set for extended weakness, credit conditions remain tight, unemployment is starting to rise and many people are having to remortgage at a significantly higher rate.

"This suggests that the number of companies being wound-up and people facing bankruptcy will rise markedly over the coming months. Significantly, it is those companies and individuals that have the weakest credit ratings that are being the hardest hit by reduced credit availability and higher interest rates. Furthermore, hopes that the Bank of England will come to the rescue with further significant interest rate cuts have been dashed in the near term at least by the current marked pick up in inflation levels and risks."

Further to the bankruptcy figures, the Council of Mortgage Lenders (CML) now predicts as many as 45,000 households will face repossession in 2008.

"Over recent months, however, we’ve observed a steady growth in the numbers of worried homeowners calling us for debt help and advice," said a spokesperson for debt management firm Gregory Pennington.

"We would, however, like to stress that individual homeowners don’t have to become a statistic.

"In the vast majority of cases, there’s no need for it to come to repossession, as long as people spot potential problems early on and take action before it’s too late. As a rule of thumb, the earlier someone seeks debt advice, the more options they will have at their disposal – and the greater their chances will be of retaining ownership of their property."

Daniel Barnes