Only three months into the year and already over 25,000 people have become casualties of the insolvency epidemic, a report from The Insolvency Service reveals.
Their figures show that in the first quarter of 2008 there have already been 25,264 individual insolvencies reported; a 1.7 per cent increase from the last quarter in 2007.
This is made up of 9,614 IVAs (up 4.3 per cent on the previous quarter) and 15,651 bankruptcies (up 0.1 per cent from the last quarter in 2007).
Ann Robinson from financial comparison website, uSwitch, says: “It’s worrying that so many people are resorting to individual insolvencies, be it an IVA or bankruptcy, to resolve their personal debt problems.
“These measures should always be the last resort for anyone with financial problems, as they have a very serious impact on people’s credit histories and their ability to borrow in the future. In the case of bankruptcy, it could also impact on employment prospects.
“If people find themselves in financial difficulty the worst thing they can do is ignore the problem and hope it goes away. I would strongly urge people to start taking action before they reach financial breaking point.”
Chiltern’s Nathan Gladwell says: “I’d echo the mantra that people should start taking action before reaching breaking point, as a more favourable outcome can usually be achieved with early negotiations with creditors. Also, only in a small number of cases would an IVA or bankruptcy be most suitable.”
“More flexible debt solutions, such as informal arrangements, offer an attractive short-term fix for borrowers whilst they get their finances under control or their situation changes for the better.
“Companies, like Chiltern, also negotiate with creditors on behalf of debtors, so the hassle is taken away for them and their debts can be re-scheduled to a more affordable level.”