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Insolvency and debt figures on the increase as people seek money advice

Thursday 8th May 2008 - 10:45

Insolvency rates have increased in first part of 2008

The number of people going insolvent looks set to hit a new high in 2008 after rising for the first time in more than a year during the first quarter.

 

A total of 25,264 people in England and Wales were declared insolvent during the period, a rise of 1.7% compared with the previous three months, the Insolvency Service said.

 

Experts warned that the figure is likely to continue to increase this year and to reach a record high, as already overstretched consumers buckle under the pressure caused by the credit crunch.

 The rise ends a run of four consecutive quarters in which the number of people going insolvent has fallen but the rise is set to increase over the coming months

But while the numbers are rising again, they are still 13.2% lower than they were during the first quarter of 2007 and the second lowest figure since the beginning of 2006.

 KPMG is predicting that a total of 130,000 people will have been declared insolvent by the end of 2008; well up on 2007's level of 106,645.

Capital Economics has pencilled in 115,000 insolvencies for 2008, possibly rising to more than 130,000 in 2009. It said the latest figures were likely to be "just the tip of the iceberg".

 

A total of 15,651 people in England and Wales went bankrupt during the three months, broadly in line with the final quarter of the year and 6.8% below the level for the corresponding three months of 2007.

 

A further 9,614 people from the total, which is seasonally adjusted and rounded down, took out an Individual Voluntary Arrangement (IVA), under which interest on debt is frozen in exchange for a set amount being repaid each month. The figure was a jump of 4.3% compared with the end of 2007, but was still 22% lower than in the first quarter of last year.

 

IVA numbers were depressed during 2007 due to a long-running dispute between creditors and IVA providers over whether the agreements were always appropriate for consumers. But their numbers are expected to rise strongly again this year after a new protocol was introduced in February.

 

This has also linked to a large number of consumers opting for the informal approach of a debt management plan (DMP) and consolidation services. Money Advice Groups debt management company and debt solution experts Kensington Financial Management Consultants www.kensingtonfinance.co.uk has seen an increase of 42.6% in the number of people looking to solve debt problems in the first part of 2008

 

Money Advice Group are debt solution experts who offer a range of options to those in financial difficulty. Money Advice Group use fully trained debt advisor/counsellors to ensure they find the right solution for you. Financial solutions from individual voluntary arrangements (IVAs) to debt consolidation and debt management are offered by Money Advice Group and Money Advice Group can consolidate your debt into one single affordable monthly payment. To find out more about the IVAs, Debt Management, debt consolidation and debt solution that are available from Money Advice Group of companies call 0800 280 0492 Or email enquiries@moneyadvicegroup.co.uk

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