IVAs increase as insolvency hits peak

FRIDAY, NOVEMBER 24, 2006

Record numbers of people have claimed insolvency over the past three months, new figures have shown.

In a report released on November 3rd, the government's Insolvency Service said a total of 27,644 people went either bankrupt or entered individual voluntary arrangements (IVA) in the period between July and September.

The government claimed 15,416 people went bankrupt during this time, an increase of 27 per cent from the same period last year.

Numbers of people opting for an IVA leapt to 12,228 - a rise of over 117 per cent from 2005.

Chairman of Consumer Credit Counselling Service Malcolm Hurlston said: "If the current trend continues, the number of IVAs will overtake the number of bankruptcy next year and that is an indication that the IVA solution is becoming more popular than is good for people."

The news follows reports by two debt companies that they have made significant increases in turnover.

Figures released by Accuma on October 31st show the group's turnover leapt to £9.98 million, an increase of 250 per cent from their 2005 figures.

The numbers of IVAs the company handled increased from 734 to 2,537 in the year up until July 31st – a rise of 245 per cent.

Debt Free Direct reported similar figures, as the company reported first-half turnover of £12.2 million, while issuing an average of 536 IVAs every month.

It also predicted 100,000 people will claim IVAs by 2010.