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May 2, 2008

Modest rise in insolvencies

by Gill Montia

Story link: Modest rise in insolvencies

The first three months of the year saw a modest rise in the number of people declared insolvent in England and Wales.

The Insolvency Service has reported that the figure increased 1.7%, to 25,264, compared with the previous three months. However, numbers are 13.2% down on the first quarter of 2007.

Of those declared insolvent, 15,651 opted for bankruptcy and around 10,000 entered into Individual Voluntary Arrangements (IVA).

While the number of debtors opting for bankruptcy remained steady, there was a 4.3% rise in the number of people entering into IVA’s, when compared to a year ago.

The increase is most probably the result differences of opinion between lenders and IVA providers having been finally ironed out, after a rather long-running dispute.

Company liquidations rose 2% in the three months to the end of March compared to the previous quarter, to 3,210. Numbers were up 4% on the same period a year ago.

The downturn in the housing market means that homeowners are less likely to be able to use their property as a bank and balance the books by withdrawing equity.

Meanwhile levels of unsecured personal debt are rising as more cash-strapped consumers use their credit cards to pay for life’s essentials, such as food and travel to work.

Personal debt experts expect the rise in insolvencies to continue throughout the year, as higher mortgage costs and fuel and food prices impact on household budgets.

 

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