Friday, February 02, 2007

Personal Insolvency at all time high

You may have missed the latest story on personal insolvencies, that is bankruptcies and IVA's, as it appeared in the FT here.

Insolvencies are at an all time high, reaching 29,804 in the last quarter of 2006. That is a 7% increase on the previous quarter and a 44% increase on the previous year. That brings the total for the year to an eye watering 107,288.

For some historical perspective, the figure for 1991, the height of the last recession was barely over 25,000. It then peaked at 36,794 for the WHOLE of 1992, declining to a low of 24,441 for the whole of 1997. Since then it has risen every year under Labour, part of Gordon Brown's record I suspect he would rather not shout about.

Some people blame the Enterprise act 2002. I am not convinced. The personal insolvency rules contained in that act did not come into force until April 2004, whereas the numbers have, as I said been increasing every year since 1997. Also, to go insolvent, you have to be insolvent. I do not accept that people are running up debts with the sole aim of using the new law.

Should we be worried? Well it is not news to cheer us up. Rising insolvencies means someones bills are not being paid, and some houses are being sold in "fire sales". Also it can be an indicator of looming trouble ahead.

(Figures for 1992 to 2002 obtained from the Office for National Statistics here)

Update 15:44

The BBC has this article here. It also points out that repossessions are up to 91,200, a rise of 29% over 2005. That is a clear indicator that all is not well with the world.

Update 17:06

I have been doing some digging.

According to both the DCA (Department for Constitutional Affairs, formerly the Lord Chancellor's office) and the Council of Mortgage Lenders, whilst the number of possession orders granted is 91,195. However the number of houses actually repossessed is 17,000. This is a 70% rise on 2005, and is the highest since 2000. House repossessions peaked in 1991 at 71,540.

See the Council of Mortgage lenders statistics here, and the DCA statistics here.

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