Insolvency rate continues to hit the roof |
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Published
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Fri, 03 Nov 2006 13:15
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LONDON - Insolvencies in England and Wales jumped by 55 percent over the last year to a record breaking 27,644 in the three months ending September 30, according to official data released on Friday.
The Insolvency Service said 15,416 people declared bankruptcy between July and September, while another 12,228 took out an individual voluntary arrangement (IVA). The latter is a system where the debtor reaches an agreement with creditors over how the money owed will be repaid.
The figures also show that the number of insolvencies is 26.6 percent above that recorded last year, while the number of IVAs more than doubled by 117 percent.
"We are concerned by the narrowing gap between the number of bankruptcies and IVAs. If the current trend continues the number of IVAs will overtake the number of bankruptcy next year and that is an indication that the IVA solution is becoming more popular than is good for people," said Malcolm Hurlston, chairman of the Consumer Credit Counselling Service.
Many advocacy groups have criticized IVA providers saying that consumers could be better off declaring bankruptcy or coming to alternative arrangement with their creditors.
Stephen Treharne, head of personal insolvency at KPMG told BBC News that the advice sector had minimal regulation, "Several lending institutions have raised concerns at these record levels and have commented on the limited extent to which the advice sector is regulated," he added. "I fear that more consumers will fail to meet their minimum monthly credit card and loan payments."
It is widely expected that the Bank of England will raise the repo rates to 5 percent from 4.75 percent next week. Analysts say that the rate rise will trigger off another headache for those in debt.
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Time and Tiny wait for no man as 1,500 workers left in the lurch 