Accountancy Magazine
Personal insolvencies hit 130,000
Record high but corporate insolvencies are down
05 February 2010
Figures released by the government’s Insolvency Service today revealed that personal insolvencies have hit record numbers, with 134,142 entering into personal insolvency as UK consumers continue to struggle amid the recession.
The number of personal insolvencies has reached a record high at over 130,000, a 24.9% increase from the same period in 2008, but corporate insolvencies are showing a 39.7% decrease in Q4 2009 compared with the same time last year.
Pat Boyden, partner and personal insolvency expert at PricewaterhouseCoopers, said: ‘The huge numbers of people entering insolvency demonstrates the real effect the recession is having on the average person in the UK. However, the one chink of light in this worrying story is that more of those people entering insolvency are entering into individual voluntary arrangements as opposed to straight bankruptcy, meaning they are seeking ways of settling their debts.’
Figures from PwC reveal that average household debt levels stand at £60,000 per household, made up of £50,000 in secured debt and £10,000 in unsecured debt.
Alec Pillmoor, head of personal insolvency at Baker Tilly, said: ‘The total number of personal insolvencies for the final quarter are broadly similar to Q3 of 2009. While the recent unemployment statistics have been more favourable, many families are finding it difficult to manage their finances with reduced hours of work. Our major concern is for 2010 as the predicted increase in interest rates and reductions in public sector spending may result in even more individuals entering insolvency.’
Meanwhile, corporate insolvencies have experienced a decrease compared with 2008, and administrations are down 12.8% for Q4 09 compared with the previous quarter, but experts are warning of a sudden explosion of insolvencies to come.
‘The general feeling among insolvency practitioners is that the current lull is very much the quiet before the storm and that the number of new cases will rise dramatically post election,’ said Brian Johnson, insolvency partner at HW Fisher & Co.
The number of personal insolvencies has reached a record high at over 130,000, a 24.9% increase from the same period in 2008, but corporate insolvencies are showing a 39.7% decrease in Q4 2009 compared with the same time last year.
Pat Boyden, partner and personal insolvency expert at PricewaterhouseCoopers, said: ‘The huge numbers of people entering insolvency demonstrates the real effect the recession is having on the average person in the UK. However, the one chink of light in this worrying story is that more of those people entering insolvency are entering into individual voluntary arrangements as opposed to straight bankruptcy, meaning they are seeking ways of settling their debts.’
Figures from PwC reveal that average household debt levels stand at £60,000 per household, made up of £50,000 in secured debt and £10,000 in unsecured debt.
Alec Pillmoor, head of personal insolvency at Baker Tilly, said: ‘The total number of personal insolvencies for the final quarter are broadly similar to Q3 of 2009. While the recent unemployment statistics have been more favourable, many families are finding it difficult to manage their finances with reduced hours of work. Our major concern is for 2010 as the predicted increase in interest rates and reductions in public sector spending may result in even more individuals entering insolvency.’
Meanwhile, corporate insolvencies have experienced a decrease compared with 2008, and administrations are down 12.8% for Q4 09 compared with the previous quarter, but experts are warning of a sudden explosion of insolvencies to come.
‘The general feeling among insolvency practitioners is that the current lull is very much the quiet before the storm and that the number of new cases will rise dramatically post election,’ said Brian Johnson, insolvency partner at HW Fisher & Co.
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