Insolvencies up 25% year on year

The latest figures from the Insolvency Service have revealed that there were 35,574 individual insolvencies in England and Wales in the fourth quarter of 2009. This was an increase of 24.9% on the same period a year ago.

This was made up of 17,007 bankruptcies (which were down 5.5% on the corresponding quarter of the previous year), 13,219 Individual Voluntary Arrangements (IVAs), (which were up 26.3% on the corresponding quarter of the previous year) and 5,348 Debt Relief Orders (DROs) (see ‘Notes to Editors’ paragraph 12).

In the fourth quarter of 2009, 84% of bankruptcies were made on the petition of the debtor, slightly down on the three previous quarters, but comparable with 2008 as a whole. The percentage of bankruptcy orders involving trading debts (self-employed bankruptcies) was 12.4% in the third quarter of 2009 (fourth quarter 2009 figures for trading-related bankruptcies are not yet available), which is a decrease from the previous quarter, but comparable to the level in 2008 as a whole.

Commenting on the figures, Tim Moss, of moneysupermarket.com, said:

“The recession may be over in statistical terms but it will be a long time before the man on the street begins to feel any of this benefit. Today’s figures may make grim reading but I fear they don’t tell the whole picture – they do not include those entering informal debt management plans which could grow by up to 30 per cent in 2010, putting another potential 300,000 consumers in the ‘can’t cope’ category.”

“Clearly it’s not enough to talk ourselves out of a recession. Some may argue that it was the all too easy availability of credit that got many debt-ridden borrowers into their current financial situation mess, but unless the banks start lending again allowing consumers to switch from expensive products to cheaper ones, this rise in insolvencies will surely continue. Consumers need to ensure they take their financial situation into their own hands, and contact debt counselling charities such as the CCCS or the Citizens Advice Bureau if they find themselves in difficulty.”

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