Record number declared insolvent
A record number of people in England and Wales were declared insolvent during 2009, figures showed today.
A total of 134,142 people went bankrupt or took out an Individual Voluntary Arrangement (IVA) or Debt Relief Order during the year, according to the Insolvency Service.
The figure dwarfed the previous record of 107,288 personal insolvencies set in 2006, with insolvency practitioners estimating this level had already been passed by October last year.
Total company liquidations reached 19,077 during 2009, the highest figure since 1993.
However, the number of companies that went under during the final quarter of the year was lower than both the previous three months and the same quarter of 2008.
But the number of individuals declared insolvent continued to accelerate during the final three months of the year at 35,574 people - the highest level since records began in 1960.
The figure also represented a 25 per cent increase on the number of people who were unable to keep up with their debts during the final three months of 2008 and was the eight consecutive quarter during which personal insolvencies have increased.
Commentators expect this trend to continue this year, predicting that up to 150,000 people will be declared insolvent during 2010.
Mark Sands, director of personal insolvency at RSM Tenon, said: "Exceptionally high numbers in the second half of the year has led the overall annual total to a new record level, 25 per cent higher than the previous heights set in 2006.
"Despite the recent news that the recession has come to an end, the impact of unemployment and falling incomes mean that we will see levels of personal insolvencies continue to increase into 2010 as the effects of the recession continue to linger."
A breakdown of the total number of insolvencies for the final three months of 2009 showed 17,007 people went bankrupt, 7 per cent fewer than in the previous quarter.
But a record 13,219 people took out Individual Voluntary Arrangements, under which interest on debt is frozen in exchange for a set amount being repaid each month.
It is thought IVA numbers were boosted by companies cutting staff pay and overtime as an alternative to making redundancies, meaning people were in a position to repay some of what they owed, rather then being forced to declare themselves bankrupt.
There was also a further increase in the number of Debt Relief Orders (DROs) taken out in the three months to the end of December, with these rising to 5,348, up from 4,505 in the previous quarter.
The orders, introduced in April last year, offer an alternative to bankruptcy for people with debts of less than £15,000, assets of less than £300 and less than £50 surplus income a month.
Initial take-up of DROs was slow due to the orders taking longer to process than was anticipated, creating a backlog, but this has since worked its way through the system.
Chris Nutting, director of personal insolvency at KPMG, said: "Whilst the UK is technically out of recession, the harsh reality is that many people are still living beyond their means.
"Lessons from history show that personal insolvencies will continue to rise after the recession finally ends and for some time to come.
"If, as predicted, there are rises in tax and reductions in public sector spending, a lot of people will need to take drastic action to resolve their financial problems, such as applying for bankruptcy."
Tourist films plane's descent just metres above packed Caribbean beach
Bali nine: Welcome to 'Execution Island' – the Indonesian holiday resort where foreigners are sent to die
How Homer Simpson discovered the Higgs boson over a decade before scientists
The 'sex selfie stick' lets you FaceTime the inside of a vagina
Harrison Ford plane crash: Star Wars actor 'seriously injured' after light aircraft crash lands
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
End of the licence fee: BBC to back radical overhaul of how it is funded
Nigel Farage promises Ukip will not 'stigmatise' would-be migrants – and says he wants 'everyone to speak the same language'
Ex-head of MI6: 'We shouldn't kid ourselves that Russia is on a path to democracy'
Most people think legal tax avoidance is just as wrong as illegal tax evasion, poll suggests
iJobs Money & Business
£8 per hour: Recruitment Genius: This Pension Specialist was established early...
£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...