Decline in insolvency masks looming crisis

by Gill Montia

Story link: Decline in insolvency masks looming crisis

The latest figures from the Insolvency Service show the number of people being declared insolvent in England and Wales falling in the third quarter of 2007.

Individual insolvencies decreased by 3% to 26,072, as compared with the quarter to the end of June 2007.

Bankruptcies fell by 2.1% to 15,833, and Individual Voluntary Arrangements (IVAs) decreased by 4.3% to 10,239

In addition, the number of orders made by courts for home repossessions in England and Wales fell by 1% in the three months to the end of September.

However, the figures have been described as the “lull before the storm”.

According to Steve Treharne, of accountants KPMG, “The traditional ways that people can delay the impact of money worries, such as a new credit card or a second charge on their home are gradually being closed off as a result of the credit crunch. This is now a plateau, but all the indicators are that consumers are in for a rough ride.”

John Hall, chief executive of personal debt adviser, newtomorrow.com, adds: “These figures aren’t surprising and the underlying position is much worse than the figures suggest….the reason the figures are not higher still is that lenders are making it more difficult for their customers to put a voluntary debt solution in place.”

In addition, the Council of Mortgage Lenders is predicting that the number of property repossessions will rise by around 50%, in 2008.

Looking back over the 12 months to the end of September, 111,359 people went into bankruptcy or entered into an IVA, representing a 13% increase on the year to the end of September 2006.