Bankruptcies Rocket

Unsurprisingly, given the state of the economy, the number of bankruptcies has rocketed. The Insolvency Service report that corporate insolvencies rose to 4,941 in Q1 of 2009, a rise 56% over the same period last year, and rise of 7% on Q4 of 2008.

Individual insolvencies rose by 19% to 29,774, this is the highest level since records began in 1960.

Personal bankruptcies rose by 23% per cent to 19,062, and individual voluntary arrangements (IVA's) rose by almost 12% to 10,713.

Unfortunately, things are likely to get worse before any improvement in the economy (as and when that happens) kicks in.

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Banks Get Tough

Britain's ever popular and "respected" banks are starting to "get heavy" with those in debt.

The number of home repossessions and county court judgements are rising, while personal insolvencies (IVA's) are dropping. This is a sign that the banks are growing weary of the IVA culture that has sprung up in the UK over the past year or so.

The Council of Mortgage Lenders (CML) reported that the number of home repossessions across the UK has risen to its highest level in eight years, in the first 6 months of 2007. Approximately 14,000 homes were repossessed by banks and building societies in the period Jan-June 2007, this represents a rise of 30% on the same period last year.

CML attributes this to the increase in sub prime lending, ie loans made to people who would normally be considered to be a db credit risk.

Michael Coogan, CML director general, said:

"The greater risks inherent in sub-prime lending are resulting in significantly higher levels of repossession in that part of the market compared to mainstream experience."

It is not just the mortgage market that is feeling a credit squeeze, but also the unsecured loan market as well. There has been a fall in the number of people being allowed to reduce their borrowing by entering into an Individual Voluntary Arrangement (IVA).

The Insolvency Service has reported a 15% reduction in the number of IVAs issued in the second quarter of 2007 to 10,698.

The Registry Trust has reported that the number of county court judgments (CCJs) issued to consumers in England and Wales increased by 5% in the first half of 2007 to more than 420,000.

The credit squeeze will get worse over the coming months. Those that are thinking of increasing their debt burden should make sure that they fully understand what they are committing themselves to.

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Self Appointed IVA Watchdog Under Fire

An organisation that claims to be the regulator for the "cowboy-plagued" IVA industry, has itself come under fire from the Department of Trade and Industry (DTI).

An IVA (individual Voluntary Arrangement) is being touted by the cowboys in the financial services industry as a panacea for people with excessive debts.

An IVA is a legal contract between debtor and creditor, supervised by a Licensed Insolvency Practitioner (who takes a fee), the purpose of which is to reach a compromise between debtor and creditor and avoid the consequences of bankruptcy.

The DTI is more than a little aggrieved that IVA.com, which launched its website earlier this week, claims to be a regulator and was displaying the logo of the DTI's official Insolvency Service without permission.

Unfortunately for IVA.com the DTI claims that it knows nothing about the organisation, and has requested that the logo be removed.

Evidently the British Bankers' Association (BBA) also looked into the company, as the BBA logo was used without permission.

Hardly a promising start for a "regulator"!

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