Bankruptcies and IVAs Numbers Up As Debt Problems Worsen

The number of people declared bankrupt or entering into an Individual Voluntary Arrangement (IVA) increased during 2010 as personal finances suffered in the aftermath of the recession.

135,089 people were declared insolvent during 2010, which was a slight increase (0.7%) on the previous year, however this figure is twice the number of cases announced in 2005.

Bankruptcies and IVA debt solutions are now causing creditors to lose £20 million per day, which are “bound to affect new lending decisions and the cost of new credit”, warns Chris Nutting, Director of Personal Insolvency at KPMG.

The number of personal insolvencies is set to rise further this year as the full impact of tax rises and cuts in public spending will increase the pressure on personal finances.

As some of the government spending cuts has affected the funding of some free debt advice centres, consumers suffering debt problems are at risk of choosing the wrong solution to their financial problems.

For those with increasing debts, “Our initial advice is for people to speak to their creditors at the earliest opportunity to discuss their concerns before the problem gets too serious.”, Nutting added.