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| Version 2 | Version 3 |
|---|---|
| Insolvencies set for record total | Insolvencies set for record total |
| (30 minutes later) | |
| Official figures are expected to show a record number of people in England and Wales going insolvent. | Official figures are expected to show a record number of people in England and Wales going insolvent. |
| PricewaterhouseCoopers (PWC) forecast that about 27,000 people will have gone insolvent between July and September. | PricewaterhouseCoopers (PWC) forecast that about 27,000 people will have gone insolvent between July and September. |
| The figure includes bankruptcies and those entering Individual Voluntary Arrangements (IVAs) to manage debts. | The figure includes bankruptcies and those entering Individual Voluntary Arrangements (IVAs) to manage debts. |
| If the prediction turns out to be accurate, it will represent a slight rise on the previous quarter, but a 50-60% increase year-on-year. | If the prediction turns out to be accurate, it will represent a slight rise on the previous quarter, but a 50-60% increase year-on-year. |
| Experts have blamed greater personal debt for the rise in insolvencies. | Experts have blamed greater personal debt for the rise in insolvencies. |
| Marketing IVAs | Marketing IVAs |
| PWC said it expected that bankruptcies would be flat, but that there would be a sharp increase in IVAs. | PWC said it expected that bankruptcies would be flat, but that there would be a sharp increase in IVAs. |
| No one sells bankruptcies, but there are lots of firms selling the IVA concept Pat Boyden, PWC Q&A: Rising Insolvencies | No one sells bankruptcies, but there are lots of firms selling the IVA concept Pat Boyden, PWC Q&A: Rising Insolvencies |
| IVAs are heavily marketed by providers, who make money from acting as go-betweens for lenders and borrowers. | IVAs are heavily marketed by providers, who make money from acting as go-betweens for lenders and borrowers. |
| Some debt charities and lenders have criticised IVA providers for marketing them to people who would be better off either going bankrupt or coming to an informal arrangement with creditors. | Some debt charities and lenders have criticised IVA providers for marketing them to people who would be better off either going bankrupt or coming to an informal arrangement with creditors. |
| "The lenders seem to feel that the growth in IVAs is due to the marketing. No-one sells bankruptcies but there are lots of firms selling the IVA concept," PWC partner Pat Boyden told BBC News. | "The lenders seem to feel that the growth in IVAs is due to the marketing. No-one sells bankruptcies but there are lots of firms selling the IVA concept," PWC partner Pat Boyden told BBC News. |
| Mr Boyden added that the problem of indebtedness seemed to be easing of late. | Mr Boyden added that the problem of indebtedness seemed to be easing of late. |
| "Between 2000 and 2005 we saw a doubling of debt and a similar increase in insolvency. | "Between 2000 and 2005 we saw a doubling of debt and a similar increase in insolvency. |
| "However, in recent times, people have been a bit more cautious and there has been a flattening-out of debt and bankruptcy. | "However, in recent times, people have been a bit more cautious and there has been a flattening-out of debt and bankruptcy. |
| "This seems to be reflected in the number of bankruptcies, which are flat, but not in IVAs, which have risen... Marketing seems to be important in this," Mr Boyden added. | "This seems to be reflected in the number of bankruptcies, which are flat, but not in IVAs, which have risen... Marketing seems to be important in this," Mr Boyden added. |
| In response, a leading IVA provider, Thomas Charles, told BBC News that they were reacting to a real consumer need and not pushing the IVA concept inappropriately. | In response, a leading IVA provider, Thomas Charles, told BBC News that they were reacting to a real consumer need and not pushing the IVA concept inappropriately. |
| "If somebody in debt talks to a debt advisory firm, they should be given a full understanding of all the options - including bankruptcy, IVAs and informal arrangement plans," said James Falla, managing director of Thomas Charles. | "If somebody in debt talks to a debt advisory firm, they should be given a full understanding of all the options - including bankruptcy, IVAs and informal arrangement plans," said James Falla, managing director of Thomas Charles. |
| "The key is, advice has to be measured, correct and well-targeted. Nobody can enter an IVA without the acceptance of the creditors and that ultimately is the backstop," he added. | "The key is, advice has to be measured, correct and well-targeted. Nobody can enter an IVA without the acceptance of the creditors and that ultimately is the backstop," he added. |
| Rate rise | Rate rise |
| Problems for debtors may just be about to get worse. | Problems for debtors may just be about to get worse. |
| Next week, the Bank of England will decide whether UK interest rates should rise, thereby pushing mortgage repayments higher. | Next week, the Bank of England will decide whether UK interest rates should rise, thereby pushing mortgage repayments higher. |
| Most analysts predict that an interest rate rise from 4.75% to 5% is on the cards. | Most analysts predict that an interest rate rise from 4.75% to 5% is on the cards. |
| "It is difficult to predict what the impact of a rate rise will be on insolvencies, but household budgets will be squeezed and it may increase difficulties for some," Mr Boyden added. | "It is difficult to predict what the impact of a rate rise will be on insolvencies, but household budgets will be squeezed and it may increase difficulties for some," Mr Boyden added. |
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