'Bankruptcy becoming attractive option'
Business recovery experts at PricewaterhouseCoopers fear the forthcoming Enterprise Act will further reduce the stigma linked to personal bankruptcy, leading to increased personal insolvencies.
Link: Company insolvencies on the rise
This warning came as personal insolvencies climbed to a nine-year high, after figures for the quarter were released by the Department of Trade & Industry. They showed the number bankrupt individuals in England and Wales at 8,662 for the second quarter of 2003, a 14% rise on the year.
Patrick Boyden, partner in the business recovery practice at PwC, said this hike in personal insolvencies was the price being paid for the easy availability of money and warned that the increase should ‘ring alarm bells about the expansion in consumer credit’.
‘Bankruptcy is becoming an increasingly attractive option. With few penalties attached, people with nothing to lose are choosing insolvency to cleanse their debt. The forthcoming Enterprise Act will further reduce the stigma attached to bankruptcy and this may well fuel future increases in personal insolvencies,’ he added.
These comments were echoed by mid-tier firm Grant Thornton, who said the increases in the number of personal insolvencies was ‘particularly disconcerting’ and were the result of more and more people declaring voluntary bankruptcy to wipe the slate clear of crippling debts, taking advantage of more lenient and user friendly legislation introduced by the government.