Personal Insolvency Still On The Up

A record 14,000 people are thought to have been declared insolvent during March, research has shown.

The number of people going bankrupt or taking out an individual voluntary agreement (IVA) or debt relief order (DRO) during the month is estimated to be 16% higher than the previous record set in November last year.

Overall, around 35,000 people are thought to have gone insolvent during the first three months of the year, in line with figures for each of the two previous quarters, according to accountancy firm RSM Tenon.

Mark Sands, head of bankruptcy at RSM Tenon, said: "The 'debt-lag', where monies owed have piled up over a series of months before insolvency hits, can last from anything between nine and 24 months.

"The record insolvencies for March will partly be a hangover from Christmas, but it is more likely to be due to the ongoing effects of the financial crisis.

"Months of job losses and decreased earnings has taken its toll on the public's purse strings. We are likely to continue to see record numbers of people look to insolvency into 2011."

The group expects around 150,000 people to go insolvent during the whole of 2010, dwarfing 2009's record figure of 134,142.

Official insolvency figures for the first quarter are not due to be released by the Government until next week. RSM Tenon has based its research on entries to the individual Insolvency Register.

It estimates that around 18,330 people will have gone bankrupt during the first quarter, 8% more than during the previous three months.

The number of people taking out an IVA, under which interest on debt is frozen in exchange for a set amount being repaid each month, is thought to have fallen by 16%.

Posted at 01:48PM Apr 29, 2010 by Marc Stenton in Insolvency  |  Comments[0]