Saturday, 3 February 2007

Insolvencies Continue to Rise

The latest statistics from the Insolvency Service reveal that nearly 30,000 people went bust in the final quarter of 2006 - a further increase of 7% on the previous quarter and up by over 44% on the same period a year ago.

The majority of insolvencies were bankruptcies (17,063), which accelerated (up over 9%) their growth on previous quarters as the numbers of people entering IVA's started to steady (12,741 in the quarter and a rise of only 4% on the previous period), which may indicate that the harder line on IVA's being pursued by the credit industry whereby proposals of anything less than 40p in the £ are starting to be rejected, maybe back-firing on lenders as debtors are forced into bankruptcy as an alternative.

Damon Gibbons, Chair of Debt on our Doorstep commented:

"These figures demonstrate that the UK's debt problem shows no sign of abating. The results of lax lending policies in previous years are really starting to come home for the credit industry, with over 100,000 individual insolvencies in 2006. The rate of growth in the last year has been staggering and the Government needs to urgently review its plans to prevent over-indebtedness in the UK. On this evidence, the plan isn't working."

Debt on our Doorstep has previously highlighted the need for much stronger regulation of the industry to prevent irresponsible lennding, full data sharing by lenders to ensure proper assessment of a borrowers total indebtedness, placing a requirement on the credit industry to take proper account of ability to pay before making a loan, and requiring the financial services industry to support the provision of debt advice services through a statutory levy.

No comments: