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."
- 1 Toddler throws a tantrum at the White House – in front of Barack Obama
- 2 Irish people are travelling home from all over the world so they can vote to legalise gay marriage
- 3 Picture of couple posing with beached dolphin 'that later died' causes outrage
- 4 16-year-old girl beaten and burned alive by lynch mob in Rio Bravo, Guatemala
- 5 Witch doctor arrested after forcing newborn baby to walk in Indian village
Toddler throws a tantrum at the White House – in front of Barack Obama
Maryland mother found pushing her dead child on a swing in a playground
16-year-old girl beaten and burned alive by lynch mob in Rio Bravo, Guatemala
Picture of couple posing with beached dolphin 'that later died' causes outrage
Nicola Sturgeon did want David Cameron to win the general election, report concludes
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
Report finds that Britain's wages are the most unequal in Europe
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...