Bankruptcies soar to reach new high

1 May 2009 02:03pm

The number of people declared bankrupt has soared to a new high during the first quarter of the year, Government figures show.

A total of 19,062 people in England and Wales went bankrupt in the three months to the end of March, according to the Insolvency Service, the highest number since records began in 1960 and 23% up on the same quarter of 2008.

A further 10,713 people took out an Individual Voluntary Arrangement (IVAs), under which interest on debt is frozen in exchange for a set amount being repaid each month, pushing the total number of people declared insolvent up to 29,774 on a seasonally-adjusted basis - also a new record.

Corporate failures reached a 16-year high, with company liquidations jumping by 57% compared with the first quarter of 2008, to 5,011 on a non-seasonally adjusted basis.

Experts warned personal insolvency levels looked set to continue increasing this year due to the economic downturn and rising unemployment.

KPMG expects a record 150,000 people to be declared insolvent during 2009, well up on the previous high of 107,000 in 2006.

The figure is likely to be boosted by Debt Relief Orders (DROs), a new alternative to bankruptcy for people with debts of less than £15,000 and little surplus income, which became available last month and will be included in the statistics from the second quarter.

Mark Sands, director of personal insolvency at KPMG, said: "Whilst consumers will fight to keep their jobs and their family homes, for those who lose both there is often little reason for someone with debts and minimal assets not to declare themselves bankrupt."

The Insolvency Service figures also showed that a total of 5,693 people were declared insolvent in Scotland during the first quarter, 71% more than during the same period of 2008, but slightly down on the previous quarter.

In Northern Ireland 458 people went insolvent, a 39% rise compared with a year earlier. Within the total, 314 people went bankrupt.

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