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Personal insolvency figures continue to rise

Bankruptcy drops but IVA numbers soar

A woman cutting up credit cards

Debt is a fast-growing problem in the UK and Europe

Personal insolvencies in England and Wales rose by 5% in the second quarter of 2010 compared with the same period last year, while figures in Northern Ireland surged by 13.6%. Personal insolvencies in Scotland fell by 14.6%.

Personal insolvencies in England and Wales

There were 34,743 individual insolvencies in England and Wales in the first quarter of 2010, according to new statistics published today by the Insolvency Service. This was an increase of 5% on the same period a year ago.

The total is made up of 14,982 bankruptcies (down 20.6% on the corresponding quarter of the previous year), 13,446 Individual Voluntary Arrangements (IVAs) (up 10.2% on the corresponding quarter of the previous year) and 6,295 Debt Relief Orders (DROs). 85.7% of bankruptcies were made on the petition of the debtor, comparable to the levels in recent quarters.

Scotland and Northern Ireland

There were 5,378 personal insolvencies in Scotland during the second quarter of 2010, down 14.6% on the same period in 2009. The total was made up of 3,139 sequestrations (the Scottish equivalent of bankruptcy) and 2,239 protected trust deeds (the Scottish equivalent of an IVA).

Northern Ireland saw the biggest overall jump in personal insolvencies in the UK, with 636 cases in the second quarter of 2010, up from 560 in the same period in 2009. This represents a leap of 13.6%

Clear need for independent debt advice

Martyn Saville, Which? principal researcher, commented: ‘These new figures could be just the tip of the iceberg. With major public spending cuts yet to bite, it’s likely that the number of UK consumers with debt problems will continue to rise in the coming years. And these figures don’t include individuals on debt management plans or who have negotiated directly with their lenders.

‘Individuals struggling with debt should seek independent, free debt advice directly from the Consumer Credit Counselling Service, National Debtline or their local Citizens Advice Bureau. Under no circumstances should you use a commercial debt management company – why pay for a profit-driven, biased service when a better alternative is available for free elsewhere?’

Which? debt advice

For more detail, including contact numbers and web addresses for free debt advice charities, see the Which? guide to dealing with debt. If you think you may be at risk of losing your home, read the free Which? guide to repossession.

Which? and Which? Money members also have free access to the expert Which? Money Helpline. See your latest magazine for contact details.

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