IVAs on the Increase Through the Recession
There were 35,242 individual insolvencies in England and Wales in the third quarter of 2009.
These figures represent an increase of 28% on the same period in 2008 and a 6.6% increase on the second quarter of 2009 as the recession continues to cause financial misery for those struggling with debt problems.
This were made up of 18,347 Bankruptcies, 12,390 Individual Voluntary Arrangements (IVAs) and 4,505 Debt Relief Orders (DROs), which only came into force in April 2009. IVA figures are up by nearly 21% on the previous quarter, showing an alarming rise as disposable income continues to be squeezed and people with higher levels of unsecured debt struggle with limited debt re-financing options. In Scotland the situation is not quite so apparent, with a 16.5% increase on the number of Protected Trust Deeds [the Scottish equivalent of an IVA] compared to the same period last year, though the latest quarter's figures of 2,263 Trust Deeds represents a fall of 301 compared to the second quarter of 2009.
In the third quarter of 2009, 85% of bankruptcies were made on the petition of the debtor, which has remained fairly constant from 2008.
Kevin Still of debt solution specialist EuroDebt, commented; "These figures are not a surprise, as unemployment continues to rise and consumer's disposable income continues to be squeezed. We would expect the number of IVAs, Bankruptcies and Debt Management Plans (DMPs) to continue to rise into 2010."
He added: "If interest rates are raised then this will have a knock on effect as well. EuroDebt is seeing more people that were historically credit worthy looking at debt management solutions because they can no longer re-finance to clear unsecured debts on credit cards and personal loans."
Click here for the full information on the Third quarter Insolvency Figures.