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Personal insolvencies ‘on the wane’

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New figures are expected to reveal that personal insolvencies have diminished over the second quarter of 2010.

According to analysts RSM Tenon, there were approximately 3% fewer personal insolvencies between April and June this year, totalling 34,743. However, upcoming budget cuts and economic sluggishness could still see individuals haunted by financial difficulties.

RSM Tenon predicts that more than 140,000 insolvencies could take place this year, a record high for the nation.

However, instead of entering insolvency, more people are seeking out individual voluntary arrangements (IVAs), under which interest on debt is frozen in exchange for a set amount being repaid each month.

There are now also more cases of debt relief orders (DROs), which offer 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.

Mark Sands, Head of Bankruptcy at RSM Tenon, said the rise in DROs and IVAs would mean any drop in the number of bankruptcies was therefore a “red herring”. He added the spending cuts would heap further pressure on those struggling with debts.

Additional Insolvency Service figures have also detailed the number of businesses going into administration during the second quarter of 2010.

There were hopes the trends seen in the first quarter would continue after total company liquidations fell by 4% quarter-on-quarter in the opening three months of the year.

Corporate insolvencies rose 0.5% on the quarter, but were sharply down on a year ago. This was made up of 1,169 compulsory liquidations, down 9.9% on the previous quarter and down 21.0% on the same period last year.

Creditors voluntary liquidations are also up 5.4% on the previous quarter, to 2,911, but down 18.3% on the corresponding quarter of 2009.

Such contrasting figures show that debt and insolvency, both business and personal, are currently undergoing times of equal promise and strife. As a result, the future remains largely unpredictable and those worried about the financial health of their home and business should seek advice as soon as possible.

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Written by Andrew Hodges

August 8, 2010 at 3:39 pm

Posted in Comment, LinkedIn

Tagged with , ,

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