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| Personal insolvency rises by 28% | Personal insolvency rises by 28% |
| (10 minutes later) | |
| A record number of people were declared insolvent in England and Wales in the third quarter of 2009, according to figures from the Insolvency Service. | A record number of people were declared insolvent in England and Wales in the third quarter of 2009, according to figures from the Insolvency Service. |
| There were 35,242 personal insolvencies, up 28% from the same period last year and an increase of 6.6% on the previous three months. | There were 35,242 personal insolvencies, up 28% from the same period last year and an increase of 6.6% on the previous three months. |
| This extended the record number which was reported earlier this year. | This extended the record number which was reported earlier this year. |
| But there was better news for business, with 4,716 company liquidations, down 4.7% quarter-on-quarter. | |
| However, the number of businesses going bust in the third quarter of the year was still 14.6% higher than the same period a year ago. | However, the number of businesses going bust in the third quarter of the year was still 14.6% higher than the same period a year ago. |
| Issues for individuals | Issues for individuals |
| The recession has been driving up the number of personal insolvencies since the end of 2007. | The recession has been driving up the number of personal insolvencies since the end of 2007. |
| FORMS OF INSOLVENCY Bankruptcy: The traditional way of escaping overwhelming debt. Ends after one year, but you are likely to lose all your assets including your house to pay something to the creditorsIndividual voluntary arrangement (IVA): A deal between you and your creditors, overseen by an insolvency practitioner. Less stigma, less chance of losing your home, but involves paying some of your debts in one go or over a number of yearsDebt Relief Orders: Introduced in April 2009, these allow consumers with debts of less than £15,000 and minimal assets or surplus income to write off debts without a full-blown bankruptcy Coping with personal insolvency Dealing with company insolvency | FORMS OF INSOLVENCY Bankruptcy: The traditional way of escaping overwhelming debt. Ends after one year, but you are likely to lose all your assets including your house to pay something to the creditorsIndividual voluntary arrangement (IVA): A deal between you and your creditors, overseen by an insolvency practitioner. Less stigma, less chance of losing your home, but involves paying some of your debts in one go or over a number of yearsDebt Relief Orders: Introduced in April 2009, these allow consumers with debts of less than £15,000 and minimal assets or surplus income to write off debts without a full-blown bankruptcy Coping with personal insolvency Dealing with company insolvency |
| The record numbers are due in part to the number of people who have found themselves out of a job during the recession, but with debts to pay off. | The record numbers are due in part to the number of people who have found themselves out of a job during the recession, but with debts to pay off. |
| This was coupled with the onset of the credit crunch, which drew back the amount of cheap credit available and meant some were unable to borrow their way out of immediate debt problems. The flat housing market also prevented them selling their homes, or drawing on equity. | This was coupled with the onset of the credit crunch, which drew back the amount of cheap credit available and meant some were unable to borrow their way out of immediate debt problems. The flat housing market also prevented them selling their homes, or drawing on equity. |
| There are various different options for insolvency - bankruptcy, individual voluntary arrangements (IVAs) and, since April, Debt Relief Orders (DROs). | There are various different options for insolvency - bankruptcy, individual voluntary arrangements (IVAs) and, since April, Debt Relief Orders (DROs). |
| The figures show that the bankruptcy option was chosen by 18,347 people, up 6.4% on the same quarter the previous year. | The figures show that the bankruptcy option was chosen by 18,347 people, up 6.4% on the same quarter the previous year. |
| Another 12,390 chose IVAs, up 20.9%, and 4,505 chose DROs, up sharply on the last three months when they were available for the first time. | Another 12,390 chose IVAs, up 20.9%, and 4,505 chose DROs, up sharply on the last three months when they were available for the first time. |
| DROs are a new and cheaper form of insolvency procedure aimed at helping people wipe the slate clean if they have debts of less than £15,000 and few assets. | DROs are a new and cheaper form of insolvency procedure aimed at helping people wipe the slate clean if they have debts of less than £15,000 and few assets. |