Largest number of insolvencies in at least half a century
By Myra Butterworth
A record 35,000 people were declared insolvent during the three months to the end of September, the largest number in at least half a century.
The latest figures from the Insolvency Service disclosed that a total of 35,242 people were declared insolvent in England and Wales during the third quarter of the year, up 28 per cent on the same period a year ago.
It means numbers are now at their highest level since records began in 1960 and experts forecast that the figures will get even worse as unemployment continues to rise.
Anthony Cork, director at accountants Wilkins Kennedy, said: “Those who have already suffered job losses are just beginning to be represented in these figures but there are many more behind them who are still battling to weather the storm.”
And he added: “Even those who have kept their jobs but have seen their hours or pay cut will be grappling to meet repayments on outstanding debts on a reduced salary.”
The individual insolvencies consisted of 18,340 bankruptcies – which were up 20.9 per cent on the same period a year ago and 12,390 of its less stringent form, Individual Voluntary Arrangements (IVAs) – which were up 27.4 per cent on the same period in 2008.
IVA is an arrangement that is entered into with those owed money, while a bankruptcy involves a formal court order where assets are sold to pay off creditors.
An alternative to bankruptcy – a debt relief order – was introduced in April, but various restrictions limit those who can apply, such as not owning your own home and having debts of less than £15,000. There were 4,505 of these orders during the third quarter.
Alan Tomlinson, partner at licensed insolvency practitioners Tomlinsons, said: “The shake-out from the credit boom continues apace, with more and more people being declared insolvent and there are no signs that this is going to change in the foreseeable future.
“In many cases, a significant number of people who would have gone bankrupt have made use of the new debt relief orders. The total number of people in trouble continues to rise inexorably.”
The figures also revealed that the number of companies that collapsed rose by 14.6 per cent year-on-year to 4,716 in the three months to the end of September.
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