Insolvency figures are ‘tip of the iceberg’

The latest figures showing insolvency rates in the UK only demonstrate the tip of the iceberg that is the country’s debt management issues, it has been claimed.

During the fourth quarter of last year, close to 25,000 people entered an Individual Voluntary Arrangement (IVA) or
bankruptcy, which represents a fall on the same period in 2006, the Insolvency Service has revealed.

However, accountancy firm Grant Thornton is convinced that the fall in insolvency rates can be partly put down to creditor behaviour and does not represent a trend that is likely to continue.

Mike Gerrard, head of personal insolvency at Grant Thornton, commented: “Take no heart from this quarter’s drop in personal insolvencies, they are merely the tip of the iceberg.

“From here on in it’s going to be a rough ride for many individuals and the numbers going insolvent will rise.”

Grant Thornton recently predicted that a third of all the personal insolvencies in 2008 will come in the first quarter as a result of excessive spending over the Christmas period.