Posted: Mon Nov 05, 2007 10:45 am
Personal insolvencies drop the ‘calm before the storm’
The number of personal insolvencies dropped 3% to just over 26,000 in the third quarter, according to Grant Thornton.
But the accountancy firm calls the fall “the calm before the storm” as the credit crunch begins to bite beyond financial markets.
The figures represent a 5% fall on the same quarter last year. The number of individual voluntary arrangements (IVAs) fell 4% year on year to just over 10,200, while bankruptcies fell 2%.
The data follows Grant Thornton research in September, which shows the total amount of UK personal debt exceeded UK gross domestic product for the first time.
The value of the country's property assets can cover the £1.38trn outstanding consumer debt but Grant Thornton says the figures demonstrate a buy now, pay later culture.
Mike Gerrard, head of personal insolvency at Grant Thornton, says: "We are seeing an increasing number of individuals turning to their credit cards to make mortgage payments.
"Using credit to pay off credit is a precarious balancing act performed the thinnest of wires, and it only takes some missed payments and a switch from a fixed to variable mortgage interest rate to send these individuals into a downward spiral.
"The traditional lifeline of remortgaging one's main property is already agonisingly out of reach for many individuals as a slow down in house prices and the credit crunch drown out this option of last resort.
"Many will have already used this option before but simply plunged back into the red.
He says personal insolvencies will leap in the first quarter of 2008 if consumer spending slows down as creditors tighten their belts and increase their rates of refusal on debt management options such as remortgaging.
House repossession orders rose 7% in the third quarter, according to the Ministry of Justice. However, they fell 1% on the same period last year to about 26,800.
Source: ifaonline.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
The number of personal insolvencies dropped 3% to just over 26,000 in the third quarter, according to Grant Thornton.
But the accountancy firm calls the fall “the calm before the storm” as the credit crunch begins to bite beyond financial markets.
The figures represent a 5% fall on the same quarter last year. The number of individual voluntary arrangements (IVAs) fell 4% year on year to just over 10,200, while bankruptcies fell 2%.
The data follows Grant Thornton research in September, which shows the total amount of UK personal debt exceeded UK gross domestic product for the first time.
The value of the country's property assets can cover the £1.38trn outstanding consumer debt but Grant Thornton says the figures demonstrate a buy now, pay later culture.
Mike Gerrard, head of personal insolvency at Grant Thornton, says: "We are seeing an increasing number of individuals turning to their credit cards to make mortgage payments.
"Using credit to pay off credit is a precarious balancing act performed the thinnest of wires, and it only takes some missed payments and a switch from a fixed to variable mortgage interest rate to send these individuals into a downward spiral.
"The traditional lifeline of remortgaging one's main property is already agonisingly out of reach for many individuals as a slow down in house prices and the credit crunch drown out this option of last resort.
"Many will have already used this option before but simply plunged back into the red.
He says personal insolvencies will leap in the first quarter of 2008 if consumer spending slows down as creditors tighten their belts and increase their rates of refusal on debt management options such as remortgaging.
House repossession orders rose 7% in the third quarter, according to the Ministry of Justice. However, they fell 1% on the same period last year to about 26,800.
Source: ifaonline.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