Posted: Tue May 08, 2007 9:43 am
Record numbers become insolvent as personal debt soars
Record numbers of people declared themselves insolvent in the first three months of the year as they buckled under the weight of their debts, government data showed yesterday.
The Insolvency Service said a total of 30,075 people went bankrupt or took out an individual voluntary arrangement (IVA) between January and March - the first time that a quarterly total has broken the 30,000 mark. That marked an increase of 1.2% over the previous quarter and a hefty 24% from the same period last year.
The figures showed that 16,842 people went bankrupt while 13,233 opted for an IVA. The growth was mainly in IVAs which were up almost 50% on the year while bankruptcies rose 10% on the year. The Liberal Democrat shadow chancellor, Vince Cable, said: "This increase in personal insolvencies to a staggering quarterly record, alongside the equally dramatic rise in home repossession claims, demonstrates the severity of Britain's personal debt crisis.
"These figures equate to more than 300 people being declared insolvent every day. But these are not freak figures. Sadly, they are likely to get even worse, especially ... when interest rates almost certainly rise next week."
The Tory chancellor, George Osborne, blamed the government. "Each of these insolvencies involves a personal tragedy and collectively they are very worrying for the economy. They tell us a lot about Gordon Brown's poor management of Britain's finances. An economy built on debt is not an economy built to last."
Steve Treharne, head of personal insolvency at KPMG, said the high level of overall insolvencies could continue throughout the year. "I expect to see the figures remain high, certainly throughout this year and probably into next," he said. There were more than 100,000 people who became insolvent last year and experts say that number will be easily exceeded this year.
Total personal debt levels in Britain are around £1.3 trillion, equivalent to a full year's economic output. Of that, about £1.1 trillion is mortgage debt while £200bn is "unsecured" - bank loans, credit cards, etc. But this form of lending has stopped growing.
Liz Bingham at Ernst & Young said: "These insolvency figures reveal that the number of people entering personal insolvency continues at a staggering rate. Debt, it seems, has never been more fashionable."
She said the expected interest rate rise to 5.5% next week would increase pressure on indebted households.
Source: guardian.co.uk
Please post any news stories about IVAs here:
http://www.iva.co.uk/forum/default.asp?CAT_ID=5
See my Blog:
http://ivanews.blogs.iva.co.uk
Record numbers of people declared themselves insolvent in the first three months of the year as they buckled under the weight of their debts, government data showed yesterday.
The Insolvency Service said a total of 30,075 people went bankrupt or took out an individual voluntary arrangement (IVA) between January and March - the first time that a quarterly total has broken the 30,000 mark. That marked an increase of 1.2% over the previous quarter and a hefty 24% from the same period last year.
The figures showed that 16,842 people went bankrupt while 13,233 opted for an IVA. The growth was mainly in IVAs which were up almost 50% on the year while bankruptcies rose 10% on the year. The Liberal Democrat shadow chancellor, Vince Cable, said: "This increase in personal insolvencies to a staggering quarterly record, alongside the equally dramatic rise in home repossession claims, demonstrates the severity of Britain's personal debt crisis.
"These figures equate to more than 300 people being declared insolvent every day. But these are not freak figures. Sadly, they are likely to get even worse, especially ... when interest rates almost certainly rise next week."
The Tory chancellor, George Osborne, blamed the government. "Each of these insolvencies involves a personal tragedy and collectively they are very worrying for the economy. They tell us a lot about Gordon Brown's poor management of Britain's finances. An economy built on debt is not an economy built to last."
Steve Treharne, head of personal insolvency at KPMG, said the high level of overall insolvencies could continue throughout the year. "I expect to see the figures remain high, certainly throughout this year and probably into next," he said. There were more than 100,000 people who became insolvent last year and experts say that number will be easily exceeded this year.
Total personal debt levels in Britain are around £1.3 trillion, equivalent to a full year's economic output. Of that, about £1.1 trillion is mortgage debt while £200bn is "unsecured" - bank loans, credit cards, etc. But this form of lending has stopped growing.
Liz Bingham at Ernst & Young said: "These insolvency figures reveal that the number of people entering personal insolvency continues at a staggering rate. Debt, it seems, has never been more fashionable."
She said the expected interest rate rise to 5.5% next week would increase pressure on indebted households.
Source: guardian.co.uk
Please post any news stories about IVAs here:
http://www.iva.co.uk/forum/default.asp?CAT_ID=5
See my Blog:
http://ivanews.blogs.iva.co.uk