Figures released by the Insolvency Service today, show 35,682 people went into bankruptcy or entered into an Individual Voluntary Arrangement or Debt Relief Order in the quarter ended 31 March 2010, an increase of 17.9% compared to the same quarter in 2009.
This amounts to 566 a day – or 71 an hour. This number has broken the previous record set last year and the signs are that the trend will continue.
Chris Nutting, director of personal insolvency at KPMG, says: “It will be interesting to see what action the new government, when it is formed, will take to address the problem of personal debt, as the debt charity CCCS has reported – it received more than 93,000 calls in the first quarter of 2010 from people seeking advice on debt problems. So clearly this remains a huge issue.
“Whilst the UK is technically out of recession, the harsh reality is that many people are still living beyond their means. History shows that personal insolvencies will continue to rise for some time after the recession finally ends.
“If, as predicted, the new government raise taxes and reduce public sector spending, a lot of people will need to take drastic action to resolve their financial problems, such as applying for bankruptcy. The cost of filing your own petition in bankruptcy rose from £510 to £600 in April, but this does not seem to have caused any reduction in the number of people filing their own petitions.”
Debt Relief Orders which were introduced in April 2009, allow consumers with debts of less than £15,000, and minimal assets or surplus income, to write off their debts without entering into a full blown bankruptcy.
Nutting says: “Our research shows that people as young as 19 are using DROs to address their financial problems. Of greater concern is the growing number of people who are aged 70 or over who have applied for a DRO. Our data shows that this part of the population has an average debt balance of £9,100, the highest across the age groups.
“If you add these DRO numbers to the bankruptcy and IVA figures it is likely that the number of personal insolvencies in 2010 will break all records.”