This site uses cookies; by continuing to use our site you agree to our use of cookies. More details in our privacy policy. Close

 

 

Number of people declaring bankruptcy on the rise 17 May 2010

The figures show the number of bankruptcy petitions lodged in the courts by debtors rose 20 per cent from the previous three months to 16,348.

Bankruptcy proceedings started by creditors also rebounded, up by four per cent  to 4,329 during the first quarter.
The MoJ said individuals and companies may have rushed through bankruptcy filings to escape the fee hike by the Official Receiver. Fees relating to The Official Receiver’s Deposit towards the costs of administering insolvency cases increased this year on 6 April for debtors’ bankruptcy petitions from £360 to £450, creditors’ bankruptcy petitions from £430 to £600, and company winding up petitions from £715 to £1,000. 
An MoJ spokesperson said: “This created an incentive for companies and individuals to present petitions to the courts before 6 April and may therefore have resulted in the increase number of petitions being made in the first quarter of 2010 compared to recent quarters.”
However Mark Sands, head of bankruptcy at RSM Tenon, dismissed the notion that fees had an impact on the figures. He said: “I would be very surprised if it was the fees that affected the results – few people are even aware of the fees and I don’t believe the increase was well known by debtors.”
Sands pointed to the three per cent year-on-year drop in individual bankruptcy petitions and said this was likely to be a result of the introduction of Debt Relief Orders (DROs), which did not exist during the same period a year ago.
Debt Relief Orders (DROs), which were introduced in April 2009, allow consumers with debts of less than £15,000, and minimal assets or surplus income, to write off their debts without entering into a full blown bankruptcy.
Sands said: “Once the 5,644 DROs are taken into account we can see that 33,209 people chose to enter into a form of personal insolvency in this three month period, as opposed to being made bankrupt by a creditor.  That means that a record proportion of 93 per cent of personal insolvencies were driven by people deciding that they cannot wait any longer."
He added: "Although the glass has started to look half full for the economy, it’s very much been drained of every drop when it comes to individuals’ personal finances.  Months of job losses and decreased earnings has taken its toll on the public’s purse strings.  We are likely to continue to see record numbers of people look to insolvency into 2011."

 

 

 

 

blog comments powered by Disqus