Personal debt leads to more insolvencies

Over 35,000 Britons became insolvent in the first three months of 2010, as many people sought to cope with their financial problems.

The number of bankruptcies increased by over 10 per cent (10.7 per cent) compared to the first quarter of 2009, up to over 18,000 (18,256).

Nearly 12,000 (11,782) Individual Voluntary Arrangements (IVAs) were taken out by people with over £15,000 of personal debt, up more than 20 per cent (20.1 per cent) on the same period last year.

However, insolvency trade body R3 fear that this is just the tip of the 'debt iceberg'.

They estimate that there could be around 500,000 with Debt Management Plans (DMPs) not included in the official figures, whilst nearly a million (961,000) people with personal debt issues are still to seek help with finances.

Kevin Still, director of Atlantic Financial Management says: "Debt Relief Orders (DROs) continue to rise in their first year of use, which is probably to be expected.

"Personal insolvency is likely to remain a political issue as inflation remains above target and pressure grows to increase interest rates."

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