The number of borrowers collapsing under the weight of their debts has soared to an all-time high.
A record 35,242 personal insolvencies were registered in the third quarter of the year — about 3,000 in London — the most since records began in 1960.
The total, up 28 per cent in a year, has been fuelled by a sharp rise in middle class families unable to cope with their finances, according to debt advisers.
– Personal insolvencies rise 28% to 49-year high (Times Online)
– Insolvencies jump to record high (Reuters)
– Largest number of insolvencies in at least half a century (Telegraph)
Famous figures who have filed for bankruptcy in the recession include former England football star John Barnes and former Atomic Kittens singer Kerry Katona.
The tally for 2009 is now certain to pass last year’s figure of 106,544 and could hit 130,000, with some experts predicting a further rise next year and in 2011.
Many of those forced into bankruptcy or the other forms of personal insolvency have lost their jobs in the recession and been unable to meet mortgage or other loans payments. The rising cost of everyday expenses such as gas and electricity bills has also contributed.
Britons built up about £1.4 trillion of debt during the long credit binge that ended in 2007 and many are now struggling to meet payments. The figures dwarf anything seen in the last recession, when the quarterly figures peaked at 10,942 in the winter of 1993.
Alan Tomlinson, partner at insolvency practitioners Tomlinsons, said: “The shake-out from the credit boom continues apace with more and more people being declared insolvent and there are no signs that this is going to change in the foreseeable future. Several times a week we are approached by people who are in a terrible way financially.”
More than 4,500 of the insolvencies were through Debt Relief Orders, a cheaper option introduced in April for people owing less than £15,000 and who have less than £50 a month to repay debt after living expenses.
A spokeswoman for Citizens Advice said: “We are seeing all sorts of different people. It was the most vulnerable who got hit first but now we are also seeing middle class families.”
Jonathan Prynn, Consumer Business Editor
Source: London Evening Standard