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One in 320 Britons Declared Insolvent During 2009

Written by on 9 February, 2010

A total of 134,142 people became insolvent during 2009 in England and Wales, latest statistics have shown. The statistics, released by the Insolvency Service following the fourth quarter, revealed that personal insolvencies increased by 25.9% on 2008 figures.

This is equivalent to one in every 320 adults becoming insolvency following defaulting on their debt repayments, and the highest number reported since records began in 1960.

In comparison to 2008 figures, bankruptcies increased by 10.7% to 74,670 while IVAs increased by 21.8% to a total of 47,641. A total of 11,831 people in England and Wales became insolvent using a Debt Relief Order, a new pathway to insolvency introduced in April 2009.

While 35,242 insolvencies were registered the third quarter, the fourth quarter saw an increase with a total of 35,574 insolvencies. Despite the majority of insolvencies in the fourth quarter being made up of 17,007 bankruptcies, this was a decrease of 7% on the third quarter. Meanwhile, IVAs increased by 7% with a total of 13,219 and Debt Relief Orders increased by a significant 19% with a total of 5,348.

IVA, or Individual Voluntary Arrangement, is a debt solution that offers consumers an alternative to bankruptcy in which they can write off a portion of their debt. The legally binding solution typically lasts for five years, during which the debtors monthly debt repayments are reduced, interest is frozen and creditor harassment stops.

Company insolvencies also increased during 2009 with a total of 19,077 compulsory liquidations and creditors’ voluntary liquidations. Although this has risen by 22.8% on 2008 figures, the results of the fourth quarter did give hope to businesses around the United Kingdom. The statistics found company insolvencies had fallen 1.7% since the third quarter and were 1.1% lower than the same period of 2008.

Despite the recession now being declared officially over in the United Kingdom, it is likely that the levels of insolvency will continue to rise in England and Wales over the coming months as the nation slowly recovers from the economic crisis and the increased unemployment of 2009.

Statistics compiled by the Insolvency Service also show that Debt Free Direct is the UK’s number one provider of IVAs. Debt Free Direct advises anyone with serious financial problems seek specialist debt help that takes into consideration their individual finances and lifestyle before deciding on any debt solution.

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