Drop in insolvencies during second quarter
September 25, 2007
The government has recently released a report that shows insolvencies have actually fallen in the UK during the second quarter of this year. Compared to the first three months of this year the level of insolvencies has seen a drop, and this is according to the government’s Insolvency Service.
During the second quarter of this year fewer than 27000 people went through bankruptcy or an IVA (Individual Voluntary Arrangement, which is al alternative to bankruptcy) according to the government statistics.
The level of reduction in the number of insolvencies in the second quarter of the year compared to the first quarter equates to around 8% overall. When it came to IVAs there was a reduction of 15% compared to the first quarter, and in terms of bankruptcy there was a drop of around 3%. It is thought that the larger drop in the level of IVAs could be partly due to banks and lender becoming far more stringent over accepting IVAs in light of the high levels of bad debt that are causing huge problems at the moment.
One officials stated that things could quickly change for the worse however, stating: ‘It may look as if personal insolvencies have finally reached a plateau, however evidence points to a peak still being someway off. The existing mountain of debt still stands, consumer spending remains unabated and there is a strong likelihood of more interest rate rises, not to mention previous ones still having to filter through the system, which will cause more individuals to resort to bankruptcies and IVAs.’
With millions of people struggling with personal debt and even mortgage repayments due to rising interest rates there has been a lot of interest in IVAs. This interest has been further fuelled by glossy advertising campaigns run by various companies that offer this type of service, but some experts are concerned that consumers do not know enough about the downside of thus course of action.
Alan Wright
25th September 2007
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