BusinessCompany NewsUK under ‘black cloud’ of debt

UK under 'black cloud' of debt

The UK is under a 'black cloud' of debt, according to the latest bankruptcy figures

A report by the Department of Trade and Industry shows that 37,886 people have been made bankrupt in the year up to 31 March. This is a 30% increase on the same period last year and the fifth consecutive quarter showing an increase.

Link: Bankruptcy rates soar in London and Ulster

Steve Treharne, head of personal insolvency at KPMG said: ‘These figures come on top of the huge increase of nearly 30% we saw last year, and do prompt the question of where this is all going to end.

‘These statistics are released just over a week after official government figures reveal there has been a 35 % increase in mortgage possession actions on the same period last year. The two trends are not unrelated. There is a big black cloud of debt hanging over the UK.

‘If the current trend continues, we could see annual rates of 60,000 bankruptcies within the next three years.’

Separate figures released by the DCA (Department of Constitutional Affairs) show an increase in the number of people declaring themselves bankrupt, rather than being forced into bankruptcy by a creditor. In the last year, 77% of all bankruptcies were people taking steps to have themselves declared bankrupt.

Steve Treharne said: ‘This increase in bankruptcy numbers has been fuelled by the changes to personal insolvency brought about by the Enterprise Act that came into effect a year ago.

‘In many people’s eyes, this Act made bankruptcy a far simpler and more attractive proposition, and removed some of the stiffer penalties previously meted out to bankrupts in the UK.’

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