Insolvency Still Rising Says Expert
(Reported in Leamington Spa Courier, November 2005)
A leading financial recovery expert has warned that the growing rate of personal insolvencies is set to keep rising.
Statistics released by the DTI revealed that there were 17,562 individual insolvencies in and in the third quarter of 2005 – an increase of almost 50 per cent on the same period in 2004
Tony Mitchell , of Coventry-based Cranfield Recovery, said that banks and other lending organisations would have to make growing provision for bad debt. He said: “These figures reflect the amount of credit people have taken on in the last few years, the results of which are now coming home to roost.
“The fact that the Enterprise Act reduced the time in which it takes to be discharged from bankruptcy from three years to just 12 months is also a factor.
“Banks and credit companies know that this will continue to hit them hard and the logical conclusion is that it should make credit harder to come-by but I think the competition in that field will simply mean that the lenders continue to take the risk.
“The number of Individual Voluntary Arrangements has risen by 95 per cent on the same quarter last year which shows that people are trying to sort out their financial problems and avoid bankruptcy.
“That said, financial problems are always best resolved at the earliest opportunity.
Mitchell added that insolvency is not a total cure to financial problems.
“There has been a great deal of talk in the media that declaring yourself bankrupt is a way of walking away from your debts but that is most certainly not the case.
“An Income Payment Order can be enforced through the courts by you to pay over a proportion of your future earnings for a maximum of three years.
“There are Income Payment Agreements which work in the same way but without additional court involvement. Both those have been rising.”
Cranfield Recovery employs 10 people and is based in Coventry. It was founded in 2001 and deals with all aspects of corporate, business and personal financial problems.
