The Insolvency Service has released new figures that show that the number of personal insolvencies reached a record high last year, with 134,142 people being declared bankrupt in 2009. Over 85 per cent of insolvencies in 2009 were petitioned by individuals, rather than by creditors. This would suggest that lenders are unwilling to push debtors into bankruptcy, which may be partially due to the fees involved in so doing and the fact that creditors may not consider that such a course of action would recover the debt in any event.
Analysts have predicted that the level of personal insolvencies will continue to rise in 2010, owing to the continuing impact of falling income and increasing unemployment. Although the economy has recently come out of recession, the number of personal insolvencies is predicted to rise by a further 12 per cent, to around 150,000, in 2010 and to remain at that level until 2012. In spite of some improvement in the unemployment figures, a lot of households are making do with fewer hours of work. With the widely predicted rise in interest rates and decrease in public sector spending, it is easy to see why experts consider that personal insolvencies are set to rise.
The number of companies failing is at its highest since 1993, with a total of 19,077 businesses going into liquidation in 2009, an increase of 23 per cent on the previous year. Figures from the last two quarters of 2009 suggest better news for businesses, however: liquidations were down 1.7 per cent year on year in the third quarter of 2009 and 1.1 per cent in the fourth quarter. The last quarter of 2009 saw only 849 administrations in England and Wales, a reduction of 58 per cent compared with the same period in 2008.
The new debt relief order, brought into force by the Courts, Tribunals and Enforcement Act 2007, has also proved a popular alternative to personal bankruptcy since its introduction in April 2009. This provides an alternative to bankruptcy and is suitable for individuals in debt who are on very low incomes and who do not own a home or have significant assets.
There are alternatives to bankruptcy and individuals or businesses facing debt problems are advised to contact us to discuss their options as soon as they encounter difficulties. The earlier you take action over your debts, the better.