More people becoming insolvent in England & Wales

More people become insolvent in England Wales in 2010

Figures released by the government recently show that a record number of people were declared insolvent in England and Wales last year. There were 135,089 people declared insolvent in 2010 according to Insolvency Service. This mean the figure for 2010 is up 0.7% on 2009 figures and the highest level of insolvency since 1960. Though the figure is gloomy for personal insolvencies, for companies going out of business, the news was better as there was 23% less company going out of business in 2010 compared with 2009.

Debt, Debt and More Debt

The record number of personal insolvencies for the whole of 2010, which was double the number in 2005, came despite a drop in the final quarter of the year when 30,729 individuals were declared insolvent.

Experts suggested this fall at the end of the year was the result of fewer people being able to attend court proceedings owing to the weather, a more sympathetic attitude from lenders, and people putting off insolvency until the new year.

Insolvencies throughout 2010 were driven by a 6.5% rise in Individual Voluntary Arrangements (IVAs) – which allow an official deal to be struck between the debtor and creditors – to 50,716.

There were also 25,179 Debt Relief Orders – a relatively new style of insolvency for relatively low debts.

However, the number of people taking the more traditional bankruptcy route fell by 20.7% compared with 2009 to 59,194.

Compared with the last recession in the early 1990s, the latest figures show a very different picture.

The number of individual insolvencies has shot up in the past decade, and now far outstrip the numbers seen in 1992 and 1993 of about 37,000 each year, although it is easier now to be declared bankrupt.

Experts said this was because the amount of credit built up by individuals – especially on credit cards – mushroomed in the last ten years. IVAs were also in their infancy in 1992-93.