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Insolvencies set for new record Insolvencies set for new record
(about 8 hours later)
The number of people going insolvent in 2006 is likely to have topped 100,000, official figures released on Friday are expected to show. The number of people going insolvent in 2006 is likely to have topped 100,000, official figures are expected to show.
If this happens, a new annual record will be set for personal insolvency. Such figures from the government's Insolvency Service would set a new annual record for personal insolvency.
The last set of insolvency figures published, for the third quarter of 2006, showed a rise of 55% on the same three-month period in 2005.The last set of insolvency figures published, for the third quarter of 2006, showed a rise of 55% on the same three-month period in 2005.
Experts have blamed greater personal debt and more awareness of what insolvency involves for the rise.Experts have blamed greater personal debt and more awareness of what insolvency involves for the rise.
"Consumer debt has more than doubled since 2000. Logically, the more people owe money the greater the number of debt casualties," Pat Boyden, a personal insolvency expert at accountancy firm PricewaterhouseCoopers, told the BBC."Consumer debt has more than doubled since 2000. Logically, the more people owe money the greater the number of debt casualties," Pat Boyden, a personal insolvency expert at accountancy firm PricewaterhouseCoopers, told the BBC.
"There are other factors at play too. People are more aware of insolvency, the stigma is less strong."There are other factors at play too. People are more aware of insolvency, the stigma is less strong.
"In addition, it is easier to access insolvency than before due to the increase in companies offering Individual Voluntary Arrangements (IVAs)," he added."In addition, it is easier to access insolvency than before due to the increase in companies offering Individual Voluntary Arrangements (IVAs)," he added.
IVA growthIVA growth
The insolvency figures include people who went bankrupt and took out IVAs.The insolvency figures include people who went bankrupt and took out IVAs.
Most of the growth in insolvency has been due to people taking out IVAs.Most of the growth in insolvency has been due to people taking out IVAs.
Under IVAs the debtor - normally through an intermediary - comes to an arrangement with their creditor to pay back part of what they owe.Under IVAs the debtor - normally through an intermediary - comes to an arrangement with their creditor to pay back part of what they owe.
The debtor does not lose their home - as can happen under bankruptcy - but they can find that they have to live to a very tight budget, until their debts are repaid and their credit record is also damaged.The debtor does not lose their home - as can happen under bankruptcy - but they can find that they have to live to a very tight budget, until their debts are repaid and their credit record is also damaged.
IVA providers have recently come under attack. Some lenders are unhappy that widespread TV advertising of IVAs may be encouraging more people to go down the insolvency route.IVA providers have recently come under attack. Some lenders are unhappy that widespread TV advertising of IVAs may be encouraging more people to go down the insolvency route.