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Warning on personal insolvencies

Warning on personal insolvencies

Category: Money

Updated: 07/05/2010
First Published: 07/05/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The number of people that were declared insolvent shot up in the first three months of 2010, while debt experts have warned that austerity measures could worsen the problem.

The number of personal insolvencies hit 35,682 in the first quarter of this year, a 17.9% increase on the same period of 2009.

It marks the fifth quarter in a row that the number of people being declared insolvent has recorded a new high, although a rise of just 108 individuals was reported in quarter one 2010, compared with the last three months of 2009.

The number of companies made insolvent actually fell on a quarterly and annual basis, but debt experts, Grant Thornton have warned that government action could see an increase in corporate insolvencies which, combined with action to cut the deficit, could lead to a marked rise in the number of personal insolvencies.

"The level of personal insolvency remains at a record high but the official figures represent the tip of the iceberg," commented Mike Gerrard, personal insolvency partner at Grant Thornton.

"Figures are not available for the number of people on debt management plans but those numbers are likely to be many times higher and even that does not account for the number of people who are outside the system but are only just managing to make ends meet.

"If government spending cuts lead to job losses in the public sector and banks toughen their stance towards struggling companies in the wake of the election, unemployment can only rise which will have a knock-on effect on the personal insolvency figures."

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