Personal insolvencies up 28% on year

Figures from the Insolvency Service have revealed that personal insolvencies were up 28% in the third quarter of 2009 compared with the same period a year ago.

There were 35,242 personal insolvencies in the period - a 6.6% increase on the second quarter.

However, the number of businesses declared bankrupt declined, with 4,716 company liquidations, down 4.7% quarter-on-quarter but still almost 15% higher when compared with a year ago.

Since the end of 2007, personal insolvencies have been soaring, primarily due to a rise in the number of people who lost their job during the recession., but with debts to pay off.

The onset of the credit crunch in autumn 2007 (which saw a shortage of cheap credit) meant many were unable to borrow their way out of debt problems. Furthermore, the property market downturn meant they were unable to sell their homes or release equity from their property to pay off debts.

Commenting on the figures, Louise Brittain, of accountancy firm Deloitte, said: “These figures are overwhelming, but not surprising, and unfortunately the end is not in sight.”

Meanwhile, compulsory liquidations of companies in England and Wales stood at 1,301 in the three month period - down 9.8% quarter-on-quarter and on an annual basis, were down 12.9%.

There were 3,415 creditors voluntary liquidations in the third quarter. This was up 30.2% on an annual basis and down just 2.6% compared with the second quarter

However, these figures represent the final part of the process of a business being wound up.

There were 1,578 other corporate insolvencies in the July to September period - which denotes the point at which a company is declared insolvent.

This comprised 410 receiverships, 974 administrations and 194 company voluntary arrangements.

Recovery and restructuring company, Begbies Traynor, recently forecast a difficult time for businesses next year.

It said there is increasing evidence that Britain was only at the mid point of a “W” shaped recession and it is predicting 40,000 businesses will go bust in 2010.

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