Insolvencies rise to record levels in second quarter |
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Sat, 05 Aug 2006 10:55
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LONDON - Government figures have shown a record number of insolvency cases in Britain after it was reported that 26,021 cases have been registered in the months between April to June, an increase of 66.3 percent, up from 15,645 in the same period last year.
The figures put the total number of cases to 49,392 in the first six months from January to June of this year. Coming a day after Bank of England raised repo rates by a quarter percent, the figures are in agreement with the experts that it is getting more and more difficult for many families to pay record gas and electricity bills, mortgage payments and council taxes and many were just giving up the fight. The Insolvency Service has said that there may be as many as 100,000 cases by the end of the year if thing do not improve.
Many have attributed the increase to the debatable Individual Voluntary Arrangements (IVAs) introduced by the government as an alternative to bankruptcy. Infact the number of people using IVAs to clear their debt has increased by an astounding 153 percent in the second quarter of the year while cases of bankruptcy has reduced by 3.3 percent as declaring a bankruptcy would result in harsh penalties on the debtors.
Meanwhile analysts predict that this situation is not going to relax and put the number of insolvency cases to 150,000 next year. Mark Sands, director of insolvencies at KPMG consultants, said, "If people think this is temporary, they have been misled. Given that consumers are now facing higher fuel and heating costs, as well as heftier council tax bills, we forecast that the stress on those in debt is likely to increase. We are entering a new era where personal insolvency is going to be an accepted part of everyday life. In the past few years there has been a complete change in people's attitude to credit and banks' attitudes to people reneging on debt."
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