Bankruptcies rising - and will continue to do so

by business editor Trevor Sturgess

Personal bankruptcies are set to keep on rising as more people lose their jobs , an expert has warned.

The warning came as the number of people in Kent declaring themselves bankrupt has shot up by 10 per cent to more than 500.

An analysis by KPMG of official insolvency figures from the Ministry of Justice showed there were 521 cases across the county in the three months to September.

In Maidstone, the number of cases increased by 42 per cent to 74, with Medway’s total edging up six per cent to 207.

John Bangham, KPMG’s director of personal insolvency, said: “Personal insolvencies are continuing to increase and it appears that there is no obvious end in sight.

"Our analysis of the figures shows that over 500 people a day are choosing formal insolvency procedures such as bankruptcy, DROs or IVAs, to solve their financial problems. This is a huge number of people who are trying to juggle their debts on a daily basis.

“Looking ahead, it’s clear that the economic climate needs to begin to turn around before we see these figures beginning to stabilise, and with unemployment numbers still rising and minimal pay rises for those in employment, this may not happen for at least 12 months time. The trend for 2010 appears to be more of the same.”

The statistics show a 10 per cent rise in people petitioning for their own bankruptcy, as opposed to being forced into bankruptcy by a creditor.

Nationally, the numbers rose by 18 per cent over the same quarter a year ago. There was also a 21 per cent increase in the use of Individual Voluntary Arrangements (IVA).

Some 16,200 people successfully petitioned the Court to bankrupt themselves, following last week’s Insolvency Service statistics which showed that 12,390 agreed an IVA in the same quarter.

In addition, a new insolvency procedure called the Debt Relief Order (DRO) - introduced in April - allows a consumer with debts of less than £15,000, and minimal assets or surplus income, to write off debts without entering into a full blown bankruptcy.

This new procedure was used by 4,505 people in quarter three, more than double the number who used the procedure in the period from April to June 2009. Adding the three numbers together reveals that 33,161 people chose to pursue an insolvency procedure in the last quarter.

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