- Continued high unemployment and rises in the costs of living may make it difficult for individuals to commit to existing payment arrangements with their creditors.
According to the fourth quarter figures for 2011, released by the Insolvency Service today, 28,973 people went into bankruptcy, entered into an Individual Voluntary Arrangement (‘IVA’) or a Debt Relief Order (‘DRO’) between October and December 2011. This was an overall decrease of 5.6 per cent compared to the same quarter in 2010. The number of bankruptcies has decreased significantly by over 28 per cent, although IVAs increased by over 4 per cent. DROs have now fully “bedded-in” since their introduction in April 2009 and their numbers continue to rise; with an increase of over 18 per cent from the same quarter last year.
Chris Nutting, Director of Personal Insolvency at KPMG said:
“Today’s bankruptcy figures, of 8,626, are in line with previous predictions of a continued decline in the numbers of individuals against whom bankruptcy orders are made. However there has been a slight increase in the number of people entering into individual voluntary arrangements in comparison to the same period last year. A lack of surplus income may be preventing individuals from seeking a formal solution to their indebtedness, given the cost of an individual petitioning for their bankruptcy amounts to £700.
“Increased unemployment figures and a lack of stability in the costs of living mean that household incomes are bearing the brunt. This, in turn, has resulted in a lack of consumer spending on the high street.
“Whilst individuals may be able to support an informal arrangement with their creditors and creditors willing to accept these payments, any increases in interest rates and continuing unemployment may force individuals to consider more formal personal insolvency options.”
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