Individual insolvencies up 28%

Statistics showing insolvencies in the third quarter of 2009 were published today by the Insolvency Service.

There were 35,242 individual insolvencies in England and Wales in the third quarter of 2009. This was an increase of 28.2% on the same period a year ago.

This was made up of 18,347 bankruptcies (which were up 6.4% on the corresponding quarter of the previous year), 12,390 Individual Voluntary Arrangements (IVAs), (which were up 20.9% on the corresponding quarter of the previous year) and 4,505 Debt Relief Orders (DROs).

The Debt Relief Order is a new individual insolvency procedure which came into force on 6 April 2009 and which provides an alternative route into personal insolvency for certain categories of over-indebted individuals, subject to some restrictions. Some of those who had a DRO approved would have been declared bankrupt had the DRO route not been an option, but it is not possible to quantify this proportion.

In the third quarter of 2009, 85% of bankruptcies were made on the petition of the debtor, slightly down on the previous quarter, although figures remain slightly higher than throughout 2008 as a whole. The percentage of bankruptcy orders involving trading debts (self-employed bankruptcies) was 13.1% in the second quarter of 2009 (third quarter 2009 figures for trading-related bankruptcies are not yet available), which is a decrease from 13.7% in the previous quarter, but a little higher than throughout 2007 and 2008.