Individual insolvencies increased by 4.2% in Q2 2007 compared with a year earlier due to a sharp increase in bankruptcies, as IVA figures fell.
There were 26,956 individual insolvencies in England and Wales during Q2 2007, with bankruptcies climbing by 7.7% on the same period a year earlier to 16,258.
IVAs fell on a year earlier by 0.7%, to 10,698, according to the Insolvency Service statistics .
However, KPMG said these figures showed an increase in the number of IVA proposals turned down by the banks, which had led to a slowdown in the number accepted.
'These high rejection rates explain in part the slowdown in IVAs being entered into,' said KPMG head of insolvency Steve Treharne. 'Creditors are taking a harder line in deciding which IVAs to accept, and debt solution companies are wary of putting forward IVAs which may not meet the approval of creditors.'
Pat Boyden, an expert in personal insolvencies at PricewaterhouseCoopers business recovery services, said that as some banks had been more inclined to turn down IVA proposals, some of these indebted had instead taken bankruptcy.
'If banks are too hard [on IVA proposals] they might drive some through to bankruptcy,' he said.
Boyden predicted that the next quarterly figures would show slightly lower growth than Q2, but pressures of rising fuel bills and interest rates could see bankruptcies and IVA rates climb again.
Further reading:
Comments