Bankruptcies up ten per cent
Friday, 7 November 2008 2:01 PM
There were 27,087 individual insolvencies in England and Wales in the third quarter of 2008, a rise of 9.5 per cent.
The figures are a strong indicator the credit crunch is now starting to hit the real economy.
Shadow business secretary Alan Duncan tried to pin the blame on Gordon Brown.
"While he grandstands on the world stage, jobs are being lost, businesses are going under and family homes are being repossessed," Mr Duncan said.
John Thurso, Lib dem business spokesman, accused chancellor Alistair Darling of not doing enough about the situation.
"Many small businesses are bleeding to death while the chancellor sits twiddling his thumbs," he said.
It represents a rise of 8.8 per cent on the previous quarter and is 4.6 per cent up on a year ago, according to data from the Insolvency Service.
A total of 4,001 firms went to the wall - a rise of 26.3 per cent on a year ago.
There were a total of 17,341 bankruptcies - a rise of 9.5 per cent on a year ago - and 9,746 Individual Voluntary Arrangements (IVAs), a fall of 3.1 per cent on a year ago a creditors become less inclined to accept the debt agreements.
A total of 83.4 per cent of bankruptcy petitions came from debtors themselves - as consumers become more aware of their options when faced with debt.
Terry Balfour, director of IVA comparison service IVA.com, said the rise in bankruptcies was due to the credit crunch and people being able to refinance.
"The rise in insolvencies is not a surprise," he said.
"The people we come across are generally employed and are being hit by rising energy and fuel costs as well as not being able to refinance."
He added the coming year as the recession looms will see further rises in insolvencies.
Mr Balfour also pointed out the fall in IVAs was due to lenders less likely to accept them and crunch on fees paid to firms organising them.
But he did record a rise in debt management plans that were simpler than IVAs, but did not provide the same level of protection.
Data from debt management provider TDX Group today show the average income of an IVA applicant increased by almost ten per cent in the past year to £23,750.
Mark Onyett, chief executive of TDX, said: "The dual impact of inflation and the reduction in availability of cheap credit solutions means that more higher earners are now taking out IVAs, and people are being forced into them sooner than ever, as their options are becoming increasingly limited."
Newsletter sign up