Bankruptcies reach record levels
The number of people being declared bankrupt in England and Wales has
hit a new record, according to the government's Insolvency Service.
In the first three months of the year there were a record 19,062
bankruptcies and 10,713 individual voluntary arrangements (IVAs).
The number of companies going bust in England and Wales fell back in the
first three months of the year.
However the figures were still 54% higher than a year ago.
The insolvency specialists Begbies Traynor predicted that personal
insolvencies might rise above 125,000 this year.
"This reflects both the stresses of high levels of personal debt and
rising unemployment and a record number of entrepreneurs going bankrupt
on the back of their business's failure," said the firm's chairman Ric
Traynor.
Personal insolvency
In the first quarter of 2009 there were 29,774 personal insolvencies in
total, 1.6% up on the previous quarter and 19% up on a year ago.
The annual number of people being declared insolvent was steady during
2006, 2007 and 2008.
But the figures started to rise in the middle of last year, reflecting
the plunge of the economy into recession.
Mark Sands, a personal insolvency expert at KPMG, said the numbers would
grow, especially when Debt Relief Orders - for people with debts of
below £15,000 - were taken into account in the future.
FORMS OF INSOLVENCY
# Bankruptcy : The traditional way of escaping overwhelming debt. Ends
after one year, but you are likely to lose all your assets including
your house to pay something to the creditors
# Individual voluntary arrangement (IVA) : A deal between you and your
creditors, overseen by an insolvency practitioner. Less stigma, less
chance of losing your home, but involves paying some of your debts in
one go or over a number of years
# Debt Relief Orders : Introduced in in April 2009, these allow
consumers with debts of less than £15,000 and minimal assets or surplus
income to write off debts without a full-blown bankruptcy
"What we are seeing is actually record levels of personal insolvency,"
Mr Sands said.
"Debt Relief Orders introduced just a month ago are going to add to what
makes these figures and take them to even higher levels," he added.
Corporate insolvency
There were 1,783 corporate insolvencies such as receiverships and
administrations in the first three months of the year, 27% fewer than in
the last quarter of 2008.
But Alan Tomlinson of insolvency specialists Tomlinsons said this dip
was not the start of a new downward trend.
"Today's statistics firmly squash the notion that there are any green
shoots of recovery out there," he said.
"Since last autumn many of the companies we are seeing have suffered
significant drops in turnover that they have been unable to replace.
"I simply cannot foresee there being a slowdown in the rate of company
insolvencies until the middle of next year," he added.
The number of company liquidations in England and Wales, the end stage
of the process for companies, saw a continued increase.
There were 4,941 compulsory liquidations and creditors' voluntary
liquidations.
That was 7.1% more than in the previous three months, and 56% more than
a year ago.
Story from BBC NEWS:
http://news.
Published: 2009/05/01 09:57:58 GMT
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