It is expected that this year we will see a record number of personal insolvencies with in excess of 130,000 people expected to enter into an Individual Voluntary Arrangement (IVA) or be declared bankrupt.
In 2007 creditors had to write off more than £1.3billion in bad debts as a result of the number of people who had entered into IVA’s in that period. It has been recently reported that the average IVA debtor owed £50,000 and proposed to repay 38% of this sum, equivalent to £19,100 per debtor.
Based on the data issued around 43,000 of people used their IVA as a route to write off a proportion of their debts last year. Similarly, approximately 67,000 people were declared bankrupt in 2007, taking total personal insolvencies to around 110,000, which was more than ever before.
In 2007 the average IVA debtor owed £50,300 however, this masks a wide spread of actual debt levels ranging from around £20,000 to more than £100,000. It is estimated that more than 2,500 people entered into an IVA with debts exceeding £100,000 last year.
In my opinion, the high level of debt clearly indicates that too many people have borrowings that they have very little realistic hope of ever repaying in full. Does this indicate that creditors should also show a little more care before providing credit facilities?
Richard A Parkin, Senior Manager, Chatsworth & Co, Insolvency Experts with over 100 years experience - a century of expertise at your fingertips. Please feel free to take a look at our website, www.yourdebtsolutions.co.uk
or call us free on 0800 321 3215