News

Personal insolvency at new record

The number of people being declared insolvent has hit a new record in England and Wales .

There were 33,073 personal insolvencies in the second quarter of 2009, said the government's Insolvency Service.

That was a 9% rise on the first three months of the year, and 27% more than in the same period last year.

The number of companies going bust in England and Wales continued to fall, down by 14% on the previous quarter but still 23% higher than a year ago.

"Overall [personal insolvency] levels will continue to increase throughout 2009, with a record level of 140,000 or more expected by the end of the year," predicted Mark Sands of the insolvency experts Tenon Recovery.

Personal insolvency

The recession has been driving up the number of personal insolvencies since the end of 2007.

In the last three months of that year, 23,830 people went bust.

The number doing so now has risen by nearly 40%.

Within the overall figure of 33,073 for the second quarter of this year, formal bankruptcy orders dropped to 18,870 from 20,446 in the previous three months.

But the overall personal insolvency figure was pushed up by the big bounce back in the use of Individual Voluntary Arrangements (IVAs), which rose in the quarter by 25%, to 12,225.

Alan Tomlinson, of a Manchester based insolvency firm, said many of the people he was dealing with were in very serious difficulty.

"The sharp rise in the number of individual insolvencies is a reflection of the ongoing fallout from irresponsible borrowing in the good years and people living beyond, in many cases way beyond, their means,".

Company insolvencies

The number for firms going under through receiverships, administration or voluntary arrangements went down for the second quarter in row.

But Richard Fleming, UK head of restructuring at the big accountancy firm KPMG, warned that this trend was unlikely to continue.

"The predicted lull during the July holiday season just hasn't materialised, as we've seen a swathe of insolvency appointments being made, across all sectors," he said.

"We see this trend continuing well into August and probably for the second half of the year.

"We're seeing that lenders are acting with more certainty as they appear to be taking more decisive action on individual cases," he warned.

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