In a bleak start to the year, the number of insolvencies also reached record levels in March, dashing hopes of an early recovery. There were 14,000 insolvencies in March, 16 per cent higher than the previous monthly record in November 2009. The number of personal insolvencies spiked during the first three months of the year, increasing by 15 per cent to 35,000 compared to the same period a year ago.
Mark Sands, head of bankruptcy at RSM Tenon, said: “The ‘debt-lag’, where monies owed have piled up over a series of months before insolvency hits, can last from anything between 9-24 months. The record insolvencies for March will partly be a hangover from Christmas, but it is more likely to be due to the ongoing effects of the financial crisis.”
Individual voluntary arrangements (IVAs) however fell by 16 per cent compared to the previous quarter. However, Sands said the fall is not indicative of an overall drop in insolvencies, but that the difficult economic climate has made it harder for people to make regular monthly repayments.
Bankruptcies and Debt Relief Orders (DROs) rose by 8 per cent and 6 per cent respectively “Around half of all personal insolvencies are bankruptcies so this apparently modest 8 per cent increase actually translates to more than 1,300 extra people going bankrupt in the last quarter.”