Bankruptcy advice may be needed if recession warning is fulfilled

Many Britons may need to consider taking bankruptcy advice or taking on an individual voluntary arrangement (IVA) if a new recession emerges, something one analyst has said is possible.

Chief global market strategist for BNY Mellon Asset Management Jack Malvey noted it is common for people to worry about a double-dip recession in the aftermath of a downturn.

However, he said the current weak economic situation may develop into just such a scenario, saying: "The worst case would be a mild, brief recession, but we are more likely to experience a low-growth recession over the next three to six months."

He added: "While the worst of the current downdraft is probably behind us, it is difficult to determine the exact market bottom for these types of corrections."

If there is another recession, this could cause more businesses to fold or cut staff and many jobs could be lost, including those at companies who retained workers in the hope that the economy was starting to recover.

Those whose personal finances are damaged by the loss of such income could find themselves with unpayable debt, not least if they are already heavily committed with large repayments.

According to figures from the UK Insolvency Service, the second quarter of 2011 saw 12,143 IVAs and 11,113 bankruptcy orders being agreed in England and Wales.

The first quarter had seen bankruptcies outnumbering IVAs by 12,539 to 10,818.

Unlike an IVA, bankruptcy cannot be kept confidential and in both cases access to credit can be restricted for six years, so those considering such options should seek advice from qualified experts.

By Joe White