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BankruptcyNews
Junior Member
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 Posted - 20 February 2007 : 16:58:21
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Bankruptcies surge in the UK
The number of individual insolvencies in England and Wales hit a record 29,804 in the fourth quarter, government figures published on Friday showed.
Data from the Insolvency Service showed that 17,063 people opted for bankruptcy in the fourth quarter and 12,741 went into a Individual Voluntary Arrangement (IVAs).
The fourth quarter showed a 7.1 per cent increase on the third quarter and a rise of 44 per cent on the same period a year ago.
The latest figures bring the total of personal insolvencies for last year to 107,288 - the first time the figure has exceeded 100,000.
IVAs, the increasingly popular alternative to bankruptcy, have more than doubled in the last 12 months as consumers struggled to repay debts. They reached 44,000 this year for the first time.
At the height of the last recession in 1991, personal insolvencies barely topped 25,000.
Steve Treharne, head of personal insolvency at KPMG said: “You could more than fill the new Wembley Stadium with those who have formally become insolvent in 2006.
“The rise in the number of people entering IVAs in particular continues at a breathtaking pace.
“Together with bankruptcies, the traditional option for the over indebted, we are now seeing new levels of personal insolvency that would never have been dreamed of a few years ago. In 2007 we expect to see IVAs overtake bankruptcies for the first time.”
The move comes as the UK’s biggest banks are becoming increasingly concerned about the growth in IVAs.
Northern Rock and HSBC are taking a tough line on companies offering IVAs because they do not believe the arrangements are always the most suitable for customers.
As creditors, banks and other lenders have to approve IVAs at a creditors meeting by a 75 per cent majority.
Accuma, one of the biggest companies selling IVAs, said this week that approval rates by creditors for IVAs fell at the end of last year.
According to KPMG’s analysis of IVA data, the average debt owed by someone entering an IVA was £52,000 - more than twice the average UK wage of £23,244.
In addition, in 2006, more than 3,000 people entered into an IVA with debts in excess of £100,000.
Citizens Advice said it was not surprised by the growth in the figures.
It said: “These figures are not surprising to us as last year, bankruptcy accounted for 65,000 of the debt problems handled by CAB advisers.
“Our bureau network also dealt with an estimated 7,000 enquiries concerning IVAs.
“This reflects the huge increase in the number of people struggling with large amounts of consumer debt.”
Figures this week also showed a sharp rise in the number of home repossessions in 2006 which are a further sign of individuals not coping with their financial affairs.
SOURCE: By Jane Croft Retail Banking Correspondent, Financial Times 2/2/2007
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Edited by - BankruptcyNews on 22 February 2007 14:56:22 |
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Bankruptcies surge in the UK
