Personal insolvencies fall as consumers tighten their belts
By Daniel Hunter
The second quarter figures for 2012, released by the Insolvency Service today (Friday), confirmed that 27,390 people went into bankruptcy, entered into an Individual Voluntary Arrangement (‘IVA’) or a Debt Relief Order (‘DRO’) between April and July 2012.
This was an overall decrease of 10.2 per cent compared to the same quarter in 2011. As expected DRO numbers continue an upward trend with a 9.6 per cent increase on the same period last year.
“The figures continue to demonstrate a declining trend in personal insolvency with overall numbers down 10.2 per cent on the same period last year," Chris Nutting, Director of Personal Insolvency at KPMG said.
"I expect the underlying downward trend to continue as households continue to adapt to a maturing culture of more prudent financial management and restricted access to credit.
“Nevertheless the figures give a mixed picture in terms of the methods of debt relief available with bankruptcy numbers showing a significant reduction of 27.1per cent and IVAs showing a reduction of 6.6 per cent in stark contrast to increasing numbers of DROs which have increased by 9.6 per cent.
"The anticipated uptake of DROs over bankruptcy seems to be gaining momentum to the extent that over the last year the use of DROs as an effective method of relief has grown to almost be as popular as bankruptcy each having a market share of 29 per cent.
“This demonstrates the changing profile of the market, with those debtors having few assets and relatively low levels of debt choosing DROs, while those with realisable assets (whether physical assets or contributions from income) opting for bankruptcy and IVAs.
“Some experts are predicting that the UK economy will see a brief reprieve following the Olympics but that we can expect to see a further downturn in... continued on page two >