Debt charity warns downward trend in personal insolvencies could reverse
Latest figures from the Insolvency Service show that there has been a decline of just over one per cent in personal insolvencies in the first quarter of 2012, compared with the last three months of 2011. However Debt Advice Foundation has warned of worrying signs that this trend could be set to reverse.
Latest figures from the Insolvency Service show that there has been a decline of just over one per cent in personal insolvencies in the first quarter of 2012, compared with the last three months of 2011. However Debt Advice Foundation has warned of worrying signs that this trend could be set to reverse.
The debt charity’s managing director, David Rodger, said: “There are no particular surprises in the latest figures, which are broadly in line with the recent downward trend.
“However, we are seeing worrying signs that this trend could be reversing. Calls to our charity's helpline in April continued at February's and March's high levels, bucking industry-wide seasonal patterns which normally see high post-Christmas call volumes decline towards Easter.
"The charity also continues to be concerned that the overall insolvency figures are being artificially depressed by the increased cost of bankruptcy.
Following the release of personal insolvency figures for the last quarter of 2012, David Rodger questioned whether the high cost of bankruptcy was a key factor in the decline in numbers.
He said: “Many in the industry are now beginning to question whether the recent erosion in bankruptcy orders is a direct result of the increasing cost of bankruptcy, which has risen by 40% in just two years.
"The combined cost of court fees & bankruptcy deposit now stands at £700, which has risen from just £495 in 2009. Leaving aside the patently illogical notion that a Bankruptcy candidate, who is by definition insolvent, should pay anything other than a notional set up fee, this rise is in stark contrast to the much more modest cost of a Debt Relief Order, which has remained the same at £90 over this period, and IVAs, which in many cases have no upfront cost.”
For more information on insolvency statistics, go to: http://www.insolvencydirect.bis.gov.uk/otherinformation/statistics/201205/index.htm
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