Personal insolvencies set to peak in Q2 of 2009

by Gill Montia

Story link: Personal insolvencies set to peak in Q2 of 2009

KPMG is predicting that the number of people declared insolvent will have increased during the third quarter of 2008 and will continue to rise until the figures peak during the second quarter of 2009.

The accountancy firm’s forecast takes into account the UK’s deteriorating economic situation and the impact of this on unemployment.

In addition, tight credit conditions will increase the number of people unable to keep up their debt repayments.

The company’s director of personal insolvency, Mark Sands, expects personal insolvencies to reach 27,000 during the third quarter of this year, up from 24,553 in the three months to the end of June.

The number of people declared bankrupt could climb 3% on the previous three months to, 17,000, or 9% above the level seen in the same period of 2007.

Individual Voluntary Arrangements could number 10,000 in the three months to the end of September, a 6% increase on the previous quarter but down 6% down the same period last year.

However, Mr Sands is predicting a dramatic rise in personal insolvencies during 2009, to 150,000.

This will be due, in part, to the introduction of Debt Relief Orders, which come into effect from April of next year.

The new order is aimed at people who have less than £15,000 in debt, less than £300 in assets and less than £50 per month to repay their debt, after all their essential expenditure is covered.

A successful application for an order will release them from the debt.