Insolvency numbers at record high

Insolvency numbers at record high

Mounting numbers of indebted Britons sent personal insolvency figures soaring to a new high as more people succumbed to the recession.

Insolvency Service statistics showed a total of 35,242 people in England and Wales were declared insolvent in the three months to the end of September - up 28% on a year earlier and the highest since records began in 1960.

A rising number of low income households opting for the Government's recently-launched Debt Relief Orders (DROs) contributed to the third quarter record.

Take-up of DROs - introduced on April 6 as an alternative to bankruptcy for people with debts of less than £15,000, assets of less than £300 and less than £50 surplus income a month - more than doubled to 4,505 in the third quarter.

The sudden leap, up from just under 2,000 in the previous three months, came after an initially slow start to DROs, which had been hampered by longer-than-expected processing after launch.

Experts warned of a grim total figure by the end of the year and further insolvency misery to come.

Marks Sands, director of personal insolvency at Tenon Recovery, said: "We have already exceeded the annual record for personal insolvencies and if this trend continues we are likely to see levels exceed 130,000 by the end of the year. We expect to see around 150,000 personal insolvencies next year, with record levels set to stay until 2012."

But the third quarter figures offered hope for recession-hit businesses as they revealed a slowdown in company failures for the second quarter in a row. The number of company liquidations - in which a firm is wound up and its assets sold off - hit 4,536 in England and Wales, down 10% on the second quarter.

Firms in administration - often a more representative measure of business failures - fell for the first time year-on-year since the fourth quarter of 2007. Administrations, where an insolvent firm is placed into the hands of administrators and managed with the hope of it continuing as a going concern, fell 3% on a year ago to 974.

There was also a chink of light in the level of personal insolvencies as quarter-on-quarter growth slowed to 7% from 9% in the three months to June. The number of personal bankruptcies - at 18,347 across England and Wales - also eased by 3% on a quarterly basis, marking a fall for the second straight quarter.