Personal insolvency could be “tip of the iceberg”

The latest personal insolvency figures might only represent the "tip of the iceberg". 

Vice-president of R3 Giles Frampton was speak…

The latest personal insolvency figures might only represent the "tip of the iceberg". 

Vice-president of R3 Giles Frampton was speaking after the latest figures from the Insolvency Service showed that 101,049 individuals were bankrupt across England and Wales in 2013, which is down 7.9 per cent on 2012's figure. 

However, he is worried that many people will have "done their best" to avoid insolvency in the run-up to Christmas and this is going to see them struggle in January and February. 

"It will be interesting to see how these figures change in the first quarter of 2014," Mr Frampton stated. 

Consumers traditionally overspend over the festive period and unless they have a solid plan in place for dealing with this situation, they can find themselves with a debt hangover.

He noted there have now been at least 100,000 new cases of personal insolvency a year since 2006. Indeed, Mr Frampton believes levels are still "astronomically high compared to recent decades". 

While the statistics make it clear that plenty of people still require debt help to get by, there are signs the UK as a whole is becoming more responsible with their finances as they try to avoid going into the red. 

Individual voluntary arrangements (IVAs) remain the most popular debt relief method though, as 12,333 were taken out in the fourth quarter of 2013, which accounts for nearly 50 per cent of all insolvencies. 

Mr Frampton believes the increasing use of IVAs is "symptomatic of people struggling with the rising cost of living", as the use of this debt management measure is usually associated with a "slow build-up of debt".

There has also been a rise in the number of self-employed individuals seeking bankruptcies, with this sector accounting for 24.4 per cent in the third quarter of 2013. 

By James Francis

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