2008 could see personal insolvency levels rise
January 7, 2008
According to some industry experts this coming year could see the level of personal insolvencies in the UK rocket, with around 130,000 already heading towards bankruptcy based on recent figures. Officials from the global accountancy group KPMG state that over the course of 2008 around 130,000 may either declare themselves bankrupt or may decide to enter into an IVA, which is an individual voluntary arrangement.
Officials from KPMG have stated that there are a number of contributory factors that are likely to affect the level of insolvencies in the UK over the coming year. Amongst the factors that have been mentioned as being partly responsible for rising insolvency levels are more financial difficulties in households with greater financial strain on many, increased costs such as petrol and food, more difficult credit conditions across the financial sector as a whole, and great levels of unsecured debt stemming from the Christmas period.
The average debt level amongst people that have entered into IVAs is just over £50,000. One industry professional stated: “This high average level of debt clearly indicates that too many people have borrowings that they have no realistic hope of repaying. Any excessive spending over Christmas and at the New Year sales, especially where goods are paid for on credit, risks tipping even more consumers over the edge.”
According to the figures around 110,000 people declared themselves insolvent in 2007, either entering into an IVA, which have become more widely advertised over recent years, or by declaring themselves bankrupt. The majority of insolvencies last year were bankruptcies, but over 40,000 of the 110,000 insolvencies were people that entered into an IVA.
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