Record personal insolvencies highlight need for debt help

08/02/2010

An increase in the number of individuals being declared insolvent has highlighted the continuing need for debt help as the UK emerges from recession.

Statistics published by The Insolvency Service revealed that there were 35,574 insolvencies in England and Wales during the last three months of 2009.

This was a 24.9 per cent rise on the figure for the fourth quarter of 2008. Levels of Protected Trust Deeds, the Scottish equivalent of an Individual Voluntary Arrangement (IVA), rose by a similar level in the same period.

The breakdown suggests more people are opting for IVAs, with 13,219 of the total opting for this debt solution, an increase of 26.3 per cent on the same period of the previous year.

Bankruptcies, however, were down 5.5 per cent compared to the last quarter of 2008, with 17,007 recorded. Some 5,348 people used the new Debt Relief Order (DRO) as a debt management alternative to bankruptcy and IVAs. DROs were only introduced in April 2009.

In 2009, a total of 134,142 individuals were declared insolvent, an increase of 25.9 per cent on 2008. This is equivalent to one in 320 adults.

Kevin Still, director of EuroDebt, commented: "The rise in personal insolvencies across the UK illustrates that there is a significant tail to the recession.

"There are probably five times as many Debt Management Plans (DMPs) as IVAs and then there are ten of thousands of people seeking debt advice and trying to self-manage, so the 134,142 represent the tip of the iceberg."

Posted by Fiona Smith

Tags; Debt Management and Banking,

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