Thursday 4th of November 2010
The number of individuals asking individual voluntary agreement (IVA) questions could remain high after one expert predicted the current inflated levels of personal insolvencies is likely to remain until the 2012 Olympics.
Mark Sands, head of bankruptcy at RSM Tenon, was speaking after his firm's real-time insolvency monitor found that the number of individuals becoming insolvent in the third quarter of the year was around 33,700.
While this does represent a slight drop on the previous three-month period, this figure is still much greater than pre-credit crunch levels and means the UK is heading for a record 140,000 personal insolvencies in 2010, the financial service warned.
"If anything, people will face even greater difficulties in the coming months with public sector cutbacks likely to leave many people facing a period of unemployment and reduced wages," Mr Sands stated. "These new challenges will be a step too far for a significant number of people that have continued to struggle with debts that have been built up over several years."
According to the study, over 13,100 individuals entered an IVA in the last three months, a figure that almost matched the number recorded in the previous quarter.
The organisation revealed approximately 366 Brits became insolvent on a daily basis in the same timeframe, which was also the sixth three-month period in a row that more than 33,000 entered a personal debt crisis.
Bankruptcy levels decreased to the numbers of 2005 in the third quarter of the year, with Mr Sands observing a nine per cent drop on the previous three months demonstrates people now view this as a last resort when trying to resolve their debt troubles.
He claimed people are now looking for alternatives to resolve their financial difficulties and therefore a dramatic drop in bankruptcy figures has little significance on total levels of personal insolvency.
Last week, research carried out by RSM Tenon suggested those areas where insolvency levels are highest could see the number of people going broke "skyrocket" as a result of cuts to public sector jobs in those parts of the country.
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- Seeking IVA advice now could prepare for the future
