Insolvency numbers decline

The number of individual insolvencies fell by 3% to 26,072 from the previous three months and were 5% down on last year. Bankruptcies fell by 2.1% to 15,833, while Individual Voluntary Arrangements (IVAs) went down by 4.3% to 10,239.

The number of home repossession orders made by courts in England and Wales also declined by 1% in the previous quarter. In the past 3 months, the total dropped to 23,806.

However, there have been many warnings by experts that repossessions will increase by about 50% in 2008. The Council of Mortgage Lenders (CML) predicted that repossessions may increase to 45,000 by the end of 2008.

Furthermore, the number of mortgages with 3 months arrears or more is also expected to increase by 17% to 170,000.

CML said many homeowners will be struggling to keep up with increasing mortgage repayments. Mark Sands of accountancy firm, KPMG, said this would push up the personal insolvency figures.

This is the third consecutive quarter that the amount of people going bust has declined. The decline reflects the fact that credit card borrowing has dwindled said Pat Boyden of accountants PricewaterhouseCoopers. He added that a decline has been noted in the last 2 years so the insolvency figures have levelled off.

However, bankruptcy levels are still 2.2% higher than 12 months ago, IVAs are now running 14% lower than compared with the same period last year.

An insolvency expert at accountancy firm Deloitte said this is primarily due to the fact that firms which specialise in arranging IVAs are more cautious. IVA specialists have been under considerable pressure to be more prudent about the cases they take on.

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