Bankruptcies hit a record high

Feb 6 2009

A record number of people in England and Wales were declared bankrupt during the final quarter of 2008 and company liquidations soared by more than 50%, figures showed.

The Insolvency Service said 19,100 people were made bankrupt on a seasonally-adjusted basis during the three months to the end of December, 22% more than in the same period of the previous year.

At the same time, 4,607 companies went into liquidation - 52% more than a year earlier - as the economic downturn continued to take its toll.

The bankruptcy figure, which overtook the record set during the previous quarter, contributed to a total of 67,428 people being declared bankrupt during the whole of 2008, also a new high.

Economists warned that the level of bankruptcies was set to increase as unemployment rose and the problems caused by the credit crunch meant people were no longer able to borrow their way out of trouble.

The increase in bankruptcies is expected to continue into this year as the economic situation worsens.

Overall, 29,444 people were declared insolvent during the final quarter of last year, 18.5% more than a year earlier.

Within this total, 10,334 people took out individual voluntary arrangements (IVAs), under which interest on debt is frozen in exchange for a set amount being repaid each month, with the rest declared bankrupt.

During 2008 as a whole, 106,544 people were declared insolvent, broadly unchanged from 2007's figure.