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Rise in bankruptcies and IVAs

20/11/2008

There were 27,087 individual insolvencies in the third quarter of 2008 – 8.8% more than in the second quarter.

As the Insolvency Service reports, most of that increase was made up by the rise in the number of bankruptcies, which rose from 15,463 in the second quarter to 17,341 in the third.

The number of IVAs (Individual Voluntary Arrangements) also rose, but not by so much: Q3’s figure of 9,746 was a relatively small increase on Q2’s 9,430.

“It’s worrying to see this increase in insolvencies,” said a spokesperson for Debt Advisers Direct. “True, a rise of under 10% may not be as alarming as some had expected, but it’s important to remember that people don’t generally become insolvent as soon as they run into financial difficulty. In other words, insolvency figures may not truly show the impact of the recession until next year.

“It’s also important to remember that many people may be able to avoid insolvency by taking appropriate action in time: in some cases, bankruptcy or an IVA really is the best way forward, but in many cases it needn’t get that far.

“Depending on the type of financial trouble they’re in, borrowers may be able to bring their finances under control with a debt solution, such as a debt management plan or debt consolidation mortgage. The important thing is to seek expert debt advice as soon as the financial problems start.”

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Debt Advisers Direct offer free debt advice and a range of debt solutions, including debt management plans, debt consolidation loans and IVAs (Individual Voluntary Arrangements).

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