Owe dear... as more go bust

Personal insolvency leaps by 10%

NEARLY 25,500 people went bust over the summer, figures have revealed.

The number – equivalent to 277 a day between July and September – was 10.6% up on the previous three months and 7.7% more than a year ago.

Households now owe more than £1.5trillion, mostly on mortgages, but with £200billion on credit cards, car finance and other unsecured borrowing.

Experts warn the situation will worsen if, as many expect, the Bank of England increases its base rate for the first time in a decade next week.

The rise in personal insolvencies was fuelled by individual voluntary arrangements. These are agreements with creditors which allow people to repay some or all of their debts over time.

The number of IVAs agreed in the three months to September was the highest since they were launched in 1987, said the Insolvency Service. Over the same period, there was a 5.2% annual fall in the number of people being declared bankrupt and a 3.3% drop in debt relief orders, designed for those on low incomes with minimal assets and debts of less than £20,000. The figures relate to England and Wales but the number of personal insolvencies in Scotland rose 0.5% – and by a whopping 25% in Northern Ireland over the same three months. Adrian Hyde, head of insolvency trade body R3, said: “Falling real wages and exhausted credit limits may have helped to push personal insolvencies up again.” Jane Tully, of the Money Advice Trust, said: “We are concerned more families will be pushed into difficulty if circumstances change.”