Surprise drop in individual insolvencies

by Gill Montia

Story link: Surprise drop in individual insolvencies

Latest figures from the Insolvency Service for the second quarter of the year have surprised analysts.

The number of individuals declared insolvent in England and Wales fell slightly to 24,553 when experts had expected higher living costs to create a rise in individual insolvencies.

According to the government body, total numbers were 8.3% down on the same period of 2007 and 2% lower than in the first quarter of 2008.

The number of people declared bankrupt from April to June fell 5.7% year-on-year and was down 1.3% on the first quarter of 2008, at 15,297.

Individual voluntary arrangements, whereby debtors agree to repay a proportion of their debt, were down 12.4% year-on-year and 3.2% on the earlier quarter, at 9,256.

However, the number of people who reached informal debt management plans in consultation with their lenders is unknown.

Businesses did not fare so well, with company liquidations in England and Wales up by 11.6% on previous quarter, to 3,560.

Provisional figures are available for other regions of the UK, with Scotland expecting 4,735 individual insolvencies in the second quarter of 2008, 45% up on the previous three months and 36% more than a year ago.

However, the rise is connected to new legislation that allows people on a low income and with low assets to make themselves bankrupt.

In Northern Ireland, 479 individual insolvencies are expected for the second quarter, up from 330 in the previous three months.

While the credit crisis has made all forms of lending harder to come by and may also be discouraging consumers from accruing debt, insolvency experts are not optimistic about further falls in insolvency rates.

Some regard the figures for the last quarter as the lull before the storm.