Insolvencies rise with recession "biting hard"

10/02/2009

The number of individual insolvencies being suffered by UK debtors is on the rise, data has suggested.

According to the Insolvency Service, applicants rose by 8.2 per cent in the final three months of 2008, when compared to the three months before.

In total, there were 29,444 insolvencies, including 19,100 bankruptcies and 10,344 people entering into Individual Voluntary Arrangements (IVAs).

The personal finances of many people have worsened over recent months, due to the increasing harshness of the economic climate.

With the credit crunch still hitting loan provision on the high street and unemployment on the rise, more and more people could be forced into declaring insolvency over the months to come.

In a statement, the Service said: "Quarter four has shown a marked increase in the number of insolvencies compared to the same period in 2007, which appears to be a real indication that the recession is now biting hard."

Kevin Still, EuroDebt director, added: "Whilst the total number of personal insolvencies in 2006, 2007 and 2008 has remained relatively static, the bias towards personal bankruptcy initiated by the debtor has risen quite markedly. Key factors influencing this appear to be falling house prices, where there is limited equity to lose for homeowners, and the sustainability of IVAs with tougher creditor acceptance criteria.

"The number of personal bankruptcies in Quarter 4 of 2008 rose by over 22 per cent compared to the same period in 2007. Over 84 per cent of these bankruptcies were made on the petition of the debtor, meaning the consumer in debt made the decision themselves rather than one or more of their creditors making the debtor bankrupt."

Tags; Housing Debt and Bills, Credit Card Lifestyle,

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