The Debt Threat Soars

Debt is rising to be (if not already) the main concern of citizens in the UK. According to the Insolvency Service’s third quarter numbers from the Insolvency Service a total of 31,670 United Kingdom citizens have filed for insolvency from July to September.

England & Wales:

The numbers are at an all time high for England and Wales with a 55% boost in insolvencies and bankruptcies mirrored against 2005’s third quarter (Q3) numbers. The numbers of people who have cases of bankruptcies are at 15,416, a 27% increase from Q3 in 2005. However, the numbers reflecting the number of citizens choosing an individual voluntary arrangement (IVA) are booming. In quarter three 12,228 people now have IVAs which is a 118% increase from last. On the horizon of 2007, IVA’s appear to take over as the leading form of personal insolvency. It is expected that by New Years, 2006’s numbers of insolvencies and bankruptcies are to reach 100,000. This being stated means that about 1 in 540 people are going to go bankrupt in England and Wales this year. Even though the numbers per quarter are steep they are growing more and more consistent to each other and resulting in only a 6% quarterly difference. However, even though personal insolvencies are sky-rocketing, the number of liquidations in companies looks to be diminishing. In quarter three alone there has been a 4.3% decrease. From 2005’s Q3 numbers until this recently past quarter only 0.7% of companies went into liquidation, which is about 1 in 143.

Northern Ireland:

Northern Ireland’s standards of bankruptcy and IVA’s mirror that of England and Wales’. Out of the 1.7 million people, only about 1 to 987 people became insolvent, with 241 bankruptcies and 184 IVAs.

Scotland:

On the other hand, Scotland’s standards are a bit different than the rest of the UK. Instead of bankruptcy they file for sequestrations and instead of IVAs: protected trust deeds. The Sequestrations remained steady throughout the year, only rising by 5% in quarter three with 1,528; while, filing for protected trust deeds dropped by 3% with 2,073 cases.

The Future of the UK:

Overall, about 1 in 530 of UK citizens has cases of insolvencies. Individuals are advised to stray away from untrustworthy adverts that show IVAs as the “easy way out”, because there is no “simple” way out of this tricky conundrum. Consumers are suggested to contact a financial counselling service that has the individual’s best interests in mind. This being said, the future of the UK’s debt scene looks to get worse before it will get better, especially after the rumored increase of rates rising to 5% by the Bank of England scheduled to occur at this weeks’ end.

http://www.myvesta.org.uk