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Consumer insolvencies up 5%

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  • 06/08/2010
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Consumer insolvencies up 5%
Figures from the Insolvency Service show personal insolvencies, including bankruptcies and IVAs in England and Wales, have risen 5% year-on-year.

The number of bankruptcies has fallen by just over a fifth to 14,982, but the figures for borrowers applying for Individual Voluntary Arrangements (IVAs) has grown just over 10% to 13,466.

The number of Debt Relief Orders, the simplified debt arrangement introduced in 2009 and discharges the debt after one year, has also risen to 6,295.

In total, there were 34,743 individual insolvencies in England and Wales in the second quarter of 2010.

Alec Pillmoor, head of personal insolvency at Baker Tilly said today’s figures reveal the true level of heartache and hardship facing indebted families.

“While, the latest figures show unemployment to be fairly constant at 2.7 million people, there are record numbers of people in part-time work. As a result, family incomes have reduced and loans that had been obtained in better times can no longer be serviced,” he said.

The fact IVA numbers are at an all-time high suggests people are taking proactive steps to deal with their debt problems rather than burying their heads in the sand, added Pillmoor.

The company insolvency figures show a sharp improvement against last year, down 19.1% against 2009. There were 4,080 compulsory liquidations and creditors’ voluntary liquidations in total in England and Wales in the second quarter of 2010, on a seasonally adjusted basis.

This was a decrease of 19.1% on the same period a year ago, but an increase of 0.5% on the previous quarter.

To the end of June 2010, approximately 1 in 127 active companies (or 0.8%) went into liquidation, slightly down from the previous quarter when the figure was 1 in 120.

Brian Johnson, an insolvency practitioner at accountants HW Fisher & Company said against the helthy profits reported by the banking sector, Britain’s businesses are limping on like an “army in retreat.”

“It is still difficult to see how we are going to get out of the rut that we are in, as many companies still cannot get the finance they need to survive.

“The fact that the banks are returning good numbers and improving their balance sheets will count against struggling companies rather than benefit them. Once banks are more confident, they will more readily remove funding on businesses they do not feel to be viable,” he said.

Johnson predicted that the number of companies going under will continue to rise in Q4 and into 2011.

 

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