Insolvencies 'set to rise'
Published On 13 January 2008
The number of people forced into insolvency is likely to rise over the course of 2008, as Christmas spending and economic instability take their toll.James Falla, director debt service Thomas Charles, said that insolvencies probably will go up, spread across the different options available to the indebted.
"There are quite a few predictions to say that there will be an increase and I actually think that's right, but it will be interesting to see how that's made up because when you're talking about personal insolvency, that is broken up into three things; bankruptcy, IVAs and also informal debt management plans," he said.
According to the Insolvency Service, there were 10,698 Individual Voluntary Arrangements (IVAs) arranged in the second quarter of 2007, out of 26,956 insolvencies.
"The interesting thing is that the only two that are measured with any certainty are the bankruptcy figures and the IVA figures," Mr Falla added. "Because debt management is not regulated and not a single procedure, there is no central registrar of debt management plans."
He went on to explain that most lenders prefer indebted customers to opt for debt management plans over other options as "banks are losing out on a considerable sum if the person does go bankrupt or do an IVA".
