The first quarter figures for 2012, released by the Insolvency Service today, confirmed that 28,723 people went into Bankruptcy, entered into an Individual Voluntary Arrangement (‘IVA’) or a Debt Relief Order (‘DRO’) between January and March 2012. This was an overall decrease of 4.7 per cent compared to the same quarter in 2011. However, DRO numbers continue an upward trend with a 16.3 per cent increase on the same period last year.
Chris Nutting, Director of Personal Insolvency at KPMG said: “Today’s figures illustrate that the number of people entering consensual insolvency agreements – specifically DROs and IVAs - is increasing, in stark contrast to the dramatic drop in the number of people being made bankrupt. It may be that the cost of obtaining a bankruptcy order is deterring both creditors and debtors from using this procedure for personal insolvency.
“GDP figures released in April 2012 confirm that the UK may have entered into a double dip recession. This coupled with a continuous threat of interest rates rising, may have led to many UK households taking more control of their income and expenditure. A lack of spending and more cautious purchases by risk adverse households, has contributed to the reduction in the overall number of insolvencies. However DROs continue to gather momentum and consumers with a relatively lower level of indebtedness and few assets are finding the now established DRO process a welcome solution to dealing with their debts.
“As mortgage lenders start to escalate interest rates and repayments increase, households may find a need to compromise their creditors, as already restricted expenditure is strained further. This may lead consumers to consider more formal personal insolvency options.”
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