• More than 19,000 people declared bankrupt in Q1• Figure is 23% increase on same period last year
A record 19,026 people were declared bankrupt in England and Wales during the first three months of this year, the Insolvency Service said today.
The figure was 23.4% up on the same period last year and 0.5% higher than in the last quarter of 2008.
The number of people declared insolvent, which includes those entering into individual voluntary arrangements (IVAs) with their creditors as well as bankruptcies, was up 19% year-on-year to 29,774.
Between January and March a total of 10,713 people entered IVAs, under which interest on debt is frozen in exchange for set repayments each month. The figure was 11.8% up on the first quarter of last year and 3.6% higher than in the final quarter.
Company insolvencies also increased over the period, with the number of compulsory liquidations rising to 4,941 – an increase of 7.1% on the previous quarter and an increase of 56% on the same period a year ago.
Industry experts warned there would be more to come as the economic downturn continued to take its toll on individuals and companies. Alan Tomlinson of UK licensed insolvency practitioners Tomlinsons, said: "The number of company failures is significantly up on last year and each one contributes to the overall domino effect.
"Since last autumn, many of the companies we are seeing have suffered significant drops in turnover that they have been unable to replace. Without the reserves needed to ride out their current difficulties, these companies are going under with all the ramifications for the economy that this entails, such as increased unemployment.
"I simply cannot foresee there being a slowdown in the rate of company insolvencies until the middle of next year."
Tomlinson added that individuals were "experiencing a vicious backlash from the days of easy credit" and were increasingly turning to bankruptcy instead of committing themselves to years of repayments through an IVA.
The Insolvency Service said that although bankruptcy represented a means for households to relieve financial pressure, it should not be seen as an easy option for those who had accumulated debts recklessly.
Stephen Speed, chief executive of the Insolvency Service, said: "Insolvency procedures exist to provide debt relief for insolvent companies and individuals enabling them to make a fresh start and regularise their financial position.
"However, insolvency procedures do have serious consequences and can have far-reaching implications for directors and individuals. It is vital that any person or any company concerned about their financial position should seek advice as early as possible. Insolvency can often be avoided entirely by taking early action."
- Bankruptcy and IVAs
- Borrowing & debt
- Family finances
- Consumer affairs
- Credit crunch
- Recession
- Economics
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