Personal insolvencies rose by 1.7% over Q1 2008 to 25,264 and individual voluntary arrangements rose by 4.3% to 9,614.
Figures published today by the Insolvency Service show that there was also a 0.1% rise in bankruptcies to 15,651.
Bev Budsworth, managing director of The Debt Advisor, says that with IVA firms fleeing the market, it's not surprising that there's only been a marginal rise in 2008.
He says: "The debt management and the whole financial industry has seen a turbulent 12 months, with some AIM-listed debt management companies withdrawing from the sector altogether.
"When the likes of Accuma and Debtmatters closed their sales engines earlier this year, they created a ‘vacuum’ in the market that has, so far, not been filled by other providers – hence, only a small increase.
"This withdrawal, coupled with the introduction of IVA fee capping arrangements by The Insolvency Exchange and the introduction of 40% hurdle rates by creditors, have made the management of many smaller IVAs economically less viable."
But Budsworth predicts that the relative instability of the IVA market will be short lived and that the credit crunch will really begin to take hold in the second half of the year.
He adds: “The slight increase in bankruptcies, especially debtor’s petition bankruptcies, does concern me a little. It is clear that there is still more to be done to make IVAs accessible, allowing people to repay as much as their debt as they can afford without being forced to declare themselves bankrupt.”
