The number of individual insolvencies in England and Wales has risen by 1.7 per cent in the first quarter of 2008, compared with the previous quarter.
According to new figures from the Insolvency Service, there were 25,264 insolvencies in England and Wales in the first three months of 2008, 15,651 of which were bankruptcies which increased by 0.1 per cent on the previous quarter.
The other 9,614 insolvencies were made up of Individual Voluntary Agreements (IVAs) which saw a rise of 4.3 per cent on the quarter before. As the average household debt continues to rise, the slight increase in insolvencies suggests that struggling people are finding ways to deal with their debts.
According to the figures the number of bankruptcy orders made by the debtor has increased; for the first quarter of 2008, 84 per cent of bankruptcy orders were made by the people who owed money as opposed to their creditors.
People who turn to insolvency are often finding the repayment of debts too much to cope with and find themselves threatened with legal action by creditors. The current financial climate does not bode well for those in debt and could have provoked the slight rise in insolvencies so far this year.
As a result of the credit crisis the cost of living is rapidly increasing as food and fuel bills
hit record highs. Millions of Brits are finding themselves in fuel poverty and unable to afford luxuries like holidays that previously provided by easy credit.
According to uSwitch.com around 292 people will fall victim to insolvency today and 74 homes will be repossessed as a result of debt and the credit crisis. Figures from uSwitch show that consumer debt in the UK has now reached £1.4trillion and is rising at a rate of £1million every five minutes.
Director of Consumer Policy at uSwitch, Ann Robinson said: "It's worrying that so many people are resorting to individual insolvencies, be it an IVA or bankruptcy, to resolve their personal debt problems. These measures should always be the last resort for anyone with financial problems as they have a very serious impact on people's credit histories and their ability to borrow in the future.
"At the moment, consumers are being hit from every angle with price hikes across all areas from energy to mortgage
prices right down to a 25 per cent increase in the cost of petrol. This may be making many people feel that their finances are simply out of control. If people find themselves in financial difficulty the worst thing they can do is ignore the problem and hope it goes away. It won't."