Bankruptcies continue to fall in the UK
Personal insolvency down but simplified bankruptcy gains popularity
PERSONAL INSOLVENCIES are continuing their downward trend as the latest government statistics show a 10.2% decrease compared to the same period in 2011.
Insolvency Service second-quarter data shows personal insolvencies fell to 27,390.
Bankruptcies fell 27.1% to 8,088 compared to the previous quarter. Individual voluntary arrangements (IVAS) also declined 6.6% on the last quarter to 11,346.
However, debt relief orders, which are aimed at debtors with few assets and low debts, continued to buck the trend and increased 9.6% to 7,956.
Mark Sands, (pictured) head of personal insolvency at RSM Tenon said: “It is no coincidence that a year after base rates were reduced [to 0.5% in March 2009], personal insolvencies started a downward trend resulting in 8 of the last 9 quarters registering a fall.”
However, according to Deloitte partner Louise Brittain, the worst could still be upon us.
“While these figures are a decrease on the same period last year, they are still exceptionally high and show that every day about 300 people become insolvent. Although insolvency levels have fallen over the past 12 months, more than 100,000 people are affected each year – a much higher rate than we saw in previous years,” said Brittain, partner in Deloitte’s contentious insolvency team.
“Household finances are straining under the burden of the highest debt levels since the 1980s, and family finances are being hit by a combination of a shrinking economy and stubbornly high unemployment.
“Many families are struggling to make ends meet and a shock such as an unexpected bill, redundancy or reduced hours at work can send them tumbling towards insolvency.”
Chris Nutting, director of personal insolvency at KPMG, predicted: “Some experts are predicting that the UK economy will see a brief reprieve following the Olympics but that we can expect to see a further downturn in 2013.
“A continuous increase in household expenditure, combined with published stats this week that property values have decreased at their fastest annual rate for three years, means that households want to protect their income and conserve their expenditure. A lack of spending and more cautious purchases by risk-averse households have contributed to the reduction in the overall number of insolvencies.”