Southampton: Voluntary insolvencies fall by 10%
The number of people presenting their own bankruptcy petitions fell by 10% compared to the same quarter last year in Southampton, according to analysis of the latest Ministry of Justice bankruptcy petition statistics conducted by RSM Tenon, the leading personal insolvency specialist.
Research from RSM Tenon Tracker, a real time analytical tool, tracking both corporate and personal insolvencies, suggests that the number of personal insolvencies in Southampton totalled 350 in the last quarter when including Individual Voluntary Agreements (IVAs) and Debt Relief Orders (DROs), 5.47% higher than the same period last year.
On a national basis, the three months to 31 March 2010 saw a total of 15,783 people succeed in making themselves bankrupt, with a further 2,473 people forced into bankruptcy by creditors. That means that 86% of all bankruptcies are instigated by the person themselves – the highest proportion since records began. Although bankruptcies totalled 18,256, despite the continued effects of the recent recession this represented a drop of 11% when compared to the same time last year. However, IVAs, which also indicate a person choosing to resolve their debt problems, rose dramatically by 20% year on year, to 11,782. DROs, the relatively new alternative to bankruptcy, grew to 5,644.
RSM Tenon predict that further increases will be seen and expect to see personal insolvencies, which hit a record level of 134,142 in 2009, exceed 150,000 nationally over the course of 2010.
Duncan Swift, director of recovery at RSM Tenon in Southampton, said: “The fall in the number of bankruptcy petitions in Southampton may come as a surprise to the many people affected by the downturn; nevertheless it reflects the overall trend for a fall in people choosing to go bankrupt. Nationally, personal insolvencies have reached record levels and are expected to continue to rise, particularly as the effects of the recession continue to impact on peoples’ finances for some time after it has officially come to an end. The debt lag from Christmas and consumer debt built up over a generation are to blame for these figures. In Southampton that could mean that we see a total of 1488 personal insolvencies over the whole of 2010.
“Once the 5,644 DROs are taken into account we can see that 33,209 people chose to enter into a form of personal insolvency in this three month period, as opposed to being made bankrupt by a creditor. That means that a record proportion of 93% of personal insolvencies were driven by people deciding that they cannot wait any longer. Although the glass has started to look half full for the economy, it’s very much been drained of every drop when it comes to individuals’ personal finances. Months of job losses and decreased earnings has taken its toll on the public’s purse strings. We are likely to continue to see record numbers of people look to insolvency into 2011.
"Our analysis suggests that choosing to enter into personal insolvency is more acceptable than ever. It is though vital that people seek the proper professional advice so that they can evaluate all their options before making such an important decision that could have real long-term ramifications. The is an urgent need for the new government to ensure there is more awareness and advice about debt to ensure people understand how to deal with their problems and the challenges so many will face from the continued effects of the downturn and cutbacks in government spending.
"We expect the popularity of DROs to rise once the debate around the inclusion of pensions is resolved to ensure they are excluded from a person’s total net worth*. To date, this solution has proved more popular and better suited to women who account for 63% of all DROs."
