Levels of personal insolvency in the UK have increased for the eighth consecutive quarter and are at the highest level since records began, according to latest figures from the Government’s Insolvency Service.

 

This year 134,142 people entered into personal insolvency. 17,007 individuals were made bankrupt this quarter, 13,219 entered into Individual Voluntary Arrangements (‘IVA’) and 5,348 Debt Relief Orders (’DRO’). This totals 35,574 personal insolvencies in Q4 of 2009, which is a 24.9% increase on the same quarter of 2008. 

 

Pat Boyden, partner and personal insolvency specialist at PricewaterhouseCoopers LLP, said: "The huge numbers of people entering insolvency demonstrates the real effect the recession is having on the average person in the UK. However, the one chink of light in this worrying story is that more of those people entering insolvency are entering into IVAs as opposed to straight bankruptcy, meaning they are seeking ways of settling their debts. 

 

"These numbers are an inevitable consequence of the financial problems the UK has experienced since 2008. It is still very much a consumer issue as the numbers of self-employed bankruptcies fell in these latest figures. 

 

"Since their introduction last April, Debt Relief Orders have continued to be a popular means of dealing with smaller levels of personal debt. This is very much in line with expectations and we expect this trend to continue throughout the year." 

 

Chris Nutting, director of Personal Insolvency at KPMG said: "Whilst the UK is technically out of recession, the harsh reality is that many people are still living beyond their means. Lessons from history show that personal insolvencies will continue to rise after the recession finally ends and for some time to come.  If, as predicted, there are rises in tax and reductions in public sector spending, a lot of people will need to take drastic action to resolve their financial problems, such as applying for bankruptcy."