|
Don't have a free DebtWizard account? Find out why you should |
9 comments so far
Why not speak your mind below
Bankruptcies and IVAs soar through over indulgence of consumer debt
Page last updated Tuesday, 25 August 2009
Bankruptcies and IVAs soar 27.4% as consumers battle to control their debts.
This year, the number of individuals in
Insolvency involves an individual either going or having been made bankrupt, or successfully proposing an IVA, which is seen as a less stringent form of insolvency. An IVA allows a borrower to enter into a repayment programme, usually for 5 years, and interest and charges are frozen with the remaining debt written off upon completion of the arrangement.
The government, through the Insolvency Service, issues the insolvency figures every quarter and those for the second quarter of 2009 were released on the 7th August 2009.
According to Accountants KPMG, the average figure owed by a person entering into an IVA over the past year was £47,000 and they planned to pay just 38 per cent of this sum, equivalent to £18,200 per borrower.
Whilst the average IVA sum owed was £47,800 however, KPMG estimates that more than 2,500 people entered into IVAs with debts exceeding £100,000 that year.
So far in the first 6 months of this year 22,938 people compared to 39,115 for the whole of last year used the IVA procedure to write off a portion of their debts while another 37,932 people, also in the first 6 months of this year compared to 67,428 for the whole of last year were declared bankrupt.
An interesting point to note is that 2008 had lower combined insolvencies than for 2006 and 2007. See insolvency figures since records began.
DebtWizard Comment
The current figures reveal that this is the highest number of insolvencies since the Insolvency Service started collating records back in 1960. See insolvency figures since records began.
This would have been even higher if the government had not withdrawn Simplified Individual Arrangements, (
Currently people in debt and who decide to propose a standard IVA need 75% in value of the creditors owed to agree to grant the IVA. Through the new proposed legislation of
The first 3 months after Christmas and the New Year sales are the industry’s busiest time as people get to grips with their debts and credit card bills which is probably why that quarter experienced a higher number of bankrupts.
I am concerned that some borrowers will just not be able to cope mentally and emotionally as the pressure builds from bills in the post to harassing telephone calls from lenders wanting their money. They need to go bankrupt to put an end to their misery but often cannot afford the £510 fee per person to go bankrupt. This can be reduced to £360 per person under certain circumstances if they are on benefits. I have been campaigning with the PM and other political parties in an attempt to get a waiver on these fees, all my correspondence with the PM can be found here.
Also included in the figures are Debt Relief Orders, (DROs), these were introduced by the Government in April 2009. A DRO is designed to allow those with debts of less than £15,000 and minimal assets to write off their debts without entering into a full blown bankruptcy or having to go to Court. These are proving to be totally in effective to help consumers due to the ridiculous qualifying procedure.
You can also watch my comments on this - debt relief orders on BBC News
You can find out more on debtwizard guide to debt relief orders.
I am of the opinion that this is just the tip of the iceberg as too many people have debts that they have no realistic hope of repaying and should be proposing either an IVA or going bankrupt, instead they are languishing in long term repayment programmes with no debt or interest relief.
My forecast for 2010 is for insolvencies to run in excess of 200,000, which dwarfs the forecast for the preceding year.
Mike Saturday, 31 October 2009
Hi Jim
Unfortunately you cannot keep the money if it is paid to you.
What normally happens in an IVA is that you have to declare any windfall you receive during the term of the IVA until it has been completed (check your terms and conditions in your proposal and on your chairman’s report) any bank charges repayment will come onto this category.
What I expected the bank will do is off set the amount they pay from their claim; this is technically wrong as what the bank is doing is improving their position by reducing their debt with you in preference to the other creditors that feature in the IVA. The sum of money should be paid to the supervisor of your arrangement to be distributed to all the creditors as this is deemed to be an asset.
I do an update on bank charges; this link is on the home page, put 3 new 'updates' on the 26th October 2009.
Trust this helps.
Best wishes
Debtwizard
jim (Guest) Friday, 30 October 2009
i have been paying a iva for 7 months will i be able to reclaim all my bank charges that i have incurred over the last 6 years
Andy Stewart (Guest) Friday, 25 September 2009
Hi Mike
we spoke last year and you pointed me in the direction of Bright Oak to help me with a Debt Management Plan. Just to let you know this is perhaps the best thing we did (my wife and I). Whilst money is tight and we have no credit to back us up, we survive from month to month and things look brighter for us these days.
The Debtors keep pestering a bit, but having a strict budget we are able to cope quite well. Please let people know that Debt Management companies are a great help when you have more debt than you can cope with and controlling the debt with a company such as Bright Oak gives a new lease of life!
Thanks again Mike - without your help my debt could have killed me!
Mike Tuesday, 08 September 2009
Hi Julia
Sorry for not responding earlier, been away on leave.
Will the new business venture generate enough income to make substantial payments to your creditors? If not then you really need to consider either an IVA or bankruptcy. You mention that you may retire in three years time, it is possible that you could go bankrupt and still keep your pension, if you have one this however will need more investigation, but possible.
I cover more on IVAs and bankruptcy as well as debt management plans under, 'Debt help' link, top of page, then see 'debt solutions' and look at '6 option guide' for debt issues.
Alternatively you could fill out our budget form, see link at top right of any page, 'budget form', once complete click on the 'summary' section and then click on 'submit'. The form will go to me or my support team and we will be able to plan a way forward for you and advice more on your pension. You can use the form for free just register with email and password and activate your membership and that's it.
Many bankrupts from the 6th April 2009 will no longer have their names and addresses advertised in the local paper, this is a positive move to help those with serious debt problems which I welcome. I will report more this over the next few days.
Trust this helps.
Best wishes
Debtwizard
Julia (Guest) Thursday, 27 August 2009
Between us my husband and I have £120,000 in debts with just three years to go to retirement. We each owe about half of this on credit cards and personal loans. What to do?? We are teachers and we have recently started a small community interest company of which we are directors. The stigma of becoming bankrupt is one which we would like to avoid - particularly as it will affect our roles as company directors. We have no savings and do not own a property - we own nothing of any value. Can you advise?
Mike Monday, 24 August 2009
Hi Davie
Have a look at our budget form, see link at top right of any page, 'budget form', once complete click on the 'summary' section and then click on 'submit'. The form will go to me or my support team and we will be able to plan a way forward for you. To use the form for free just register with email and password and activate your membership and that's it.
Best wishes
Debtwizard
Davie (Guest) (Guest) Friday, 21 August 2009
Hi we are strggling to pay our car loan back as our situation has changed can you advise us of what to do please?
Mike Wednesday, 12 August 2009
Hi Katie
I have helped around 100 Police Officers and support staff go bankrupt over the past few years and 99% of them have kept their jobs.
If you want an assessment of your situation, in the strickest of confidence, then drop me an email at
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
with your contact telephone number and I will call you personally.
Best wishes
Debtwizard
katie (Guest) Wednesday, 12 August 2009
HI,
I CURRENTLY HAVE DEBTS TO THE VALUE OF £25,000 AND HAVE BEEN ADVISED THAT BANKRUPTCY IS THE ONLY ROUTE. UNFORTUNATELY I WORK FOR THE LOCAL POLICE FORCE AND AM CONCERNED THIS MAY AFFECT MY JOB. CAN YOU ADVISE?
