The North East of England continues to struggle with increasing levels of personal insolvencies, according to latest figures from the Insolvency Service.
The region suffered the UK’s highest levels of bankruptcies, Debt Relief Orders (DROs) and Individual Voluntary Arrangements (IVAs) in 2012, at 33.3 per 10,000 adults.
Comparatively, London had the lowest individual insolvency rate across all regions, at 14.8 in 10,000 adults in 2012.
Nevertheless, the Service’s statistics also show that total individual insolvency levels fell across England and Wales during 2012.
While the rate of total insolvencies per 10,000 adults in England and Wales rose from 7.2 in 2000 to a peak of 30.9 in 2009, since then the rate has decreased to just 24.5 in 2012.
Total personal insolvencies have fallen significantly from 124,054 in 2009 to 102,018 in 2012, a reduction of 17.8%.
Yet while rates of bankruptcies and IVAs have decreased between 2009 and 2012 across England and Wales (by 58.7% and 4.5% respectively), the level of DROs has increased approximately 130% since their introduction in April 2009.
Keith Algie, director of personal insolvency at Baker Tilly, said: “The reduction of formal insolvencies is indicative of the low interest rates which have enabled debtors to service historic debt levels.”
“In addition, debtors have become more consumer aware and shop around for advice rather than taking the formal insolvency route as a first step.”
“However, with redundancy levels at the rate of 1,534 a day on average, inflation continuing to outstrip wage growth, the emergence of payday loan companies as short term lenders of last resort and the possibility of interest rate rises in the mid-term, many people may be storing up problems for the future.”