04/05/2010
Latest figures suggested that despite the recession being officially over, households are struggling to make ends meet.
Experts warned the so-called debt lag – where the number of unpaid bills accrues over a series of months before insolvency hits – can last from anything between nine months to two years.
A spokesman for RSM Tenon, said: “Although the glass has started to look half full for the economy, it’s very much been drained of every drop when it comes to individuals’ personal finances.
“Months of job losses and decreased earnings have taken their toll on the public’s purse strings. We are likely to continue to see record numbers of people look to insolvency into 2011.”
The latest figures by Tenon showed 14,000 people were declared insolvent in March, the highest level since records began in 1960 and 16 per cent higher than the previous monthly record in November last year.
It means numbers reached 35,000 during the first quarter of this year, equating to more than 388 people per day.
They are worst than previous recessions as households have never been in so much debt, experts said.
The individual insolvencies consisted of 18,330 bankruptcies during the first three months of 2010, - which were up 10 per cent on the same period a year ago - and 11,046 of its less stringent form, Individual Voluntary Arrangements (IVAs) – which were up 9 per cent on the same period in 2009.
An IVA is an arrangement that is entered into with those owed money, while a bankruptcy involves a formal court order where assets are sold to pay off creditors.
An alternative to bankruptcy – a debt relief order – was introduced last April, but various restrictions limit those who can apply, such as not owning your own home and having debts of less than £15,000.
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