UK personal insolvencies fall but more businesses struggle

Friday, 04 November 2011 10:42

There was a slight fall in the number of people declared bankrupt in England and Wales in the third quarter of 2011, according to new figures released today by the Insolvency Service.

Personal insolvencies fell by around 300 to 30,219 in the third quarter from 30,513 in the second quarter. The level of insolvencies for individuals has remained around the 30,000 mark for four consecutive quarters.

Most analysts believe that the official figures belie the real situation with households, individuals and businesses paddling like mad to keep afloat.

Brian Johnson, an insolvency partner at HW Fisher & Company said: "The relatively benign company insolvency figures belie the phenomenal pressure that exists in the economy. For a big chunk of the UK's SMEs, it's like being in a slow motion car crash.”

The figures revealed a small rise in the number of businesses that became insolvent. These rose by two per cent to 1,253 for the third quarter of 2011. Although the number of firms going bust is now 10 per cent up on a year ago, personal insolvencies are down by 11 per cent.

Louise Brittain, partner in Deloitte’s Contentious Insolvency team, said: “Bankruptcy levels fell from 11,113 in the second quarter to 9,567 in the third quarter of this year. IVAs increased from 12,143 in the second quarter to 13,048 in the third quarter of this year. The increase in IVA figures indicates that creditors and debtors are now working together to agree formalised debt repayment processes to avoid bankruptcy.”

It is cleat though that the combined effects of inflation, low wage growth and redundancies mean there are more people experiencing severe financial difficulties, even if this has yet to be reflected in official insolvency figures.

Sarah Hamilton-Fairley, CEO of independent social enterprise StartHere, said: “Behind every one of those personal insolvencies is a personal crisis, but it's one that can be made easier with the right support. If this is the case there are plenty of local organisations and support groups that provide advice, not least the Citizens Advice Bureau or the Consumer Credit Counselling Service.”

This view was echoed by Chris Nutting, Director of Personal Insolvency at KPMG who said: “It is vital that debtors consult with their creditors at the earliest opportunity when faced with financial problems and seek proper advice as to the options available to them.”

Although the number of firms going bust is now 10% up on a year ago, personal insolvencies are down by 11%.

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