Bankruptcy 'soars' in the UK

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Bankruptcy 'soars' in the UK

Mon 6th Nov 2006

A record number of people in the UK have declared themselves bankrupt in 2006 due in no small part to rising card spending, according to new research.

The total that banks, building societies and credit card companies are having to write off amounts to over £4 billion, figures from the government's Insolvency Service show.

Statistics show that there were 15,416 cases of bankruptcy in the third quarter of 2006, which represents an increase of 26.6 per cent on the corresponding period last year.

Thisislondon.co.uk quote Pat Boydon of the business recovery services team at accountants PricewaterhouseCoopers as saying: "The banks are really starting to sit up and take notice now. It has reached boardroom level."

Instances of Individual Voluntary Arrangements (IVAs) were also higher than 2005 with 12,228 cases which shows a 117.9 per cent increase on the same period last year.

An IVA results in an individual needing to repay the lender some of their debt. The average bankruptcy debt stands at £50,000, whereas the average IVA debt is £62,000.

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