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Insolvency figures remain high

Friday May 7th 2010

The importance of taking out income protection insurance has been highlighted in recent Government figures that show around 35,000 people were declared insolvent during the three months to the end of March.

The latest data are broadly in line with the 35,574 declared insolvent in the final three months of last year, the highest on record.

According to accountancy firm RSM Tenon, around 18,330 people within the latest figure of people declared insolvent have actually gone bankrupt.

The figure represents an 8% increase compared with the previous three months.

The number of people taking out an Individual Voluntary Arrangement, under which interest on debt is frozen in exchange for a set amount being repaid each month, is thought to have fallen by 16%.

But the group warned that this should not be seen as a positive trend, as it is more likely to reflect the fact that job losses mean fewer people are able to afford regular repayments on their debts, forcing them to consider other options such as bankruptcy.

The number of people taking out Debt Relief Orders, which offer an alternative to bankruptcy for people with debts of less than £15,000, assets of less than £300 and less than £50 surplus income a month, is expected to have risen by 6% to 5,660.

The number of people declared insolvent has been rising steadily since the final quarter of 2007.

Copyright © Press Association 2010

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