Personal bankruptcies hit new record

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Personal bankruptcy hit a record level and company failures soared by 50% as the collapse in the economy in the final three months of 2008 took its toll, official figures showed today.

Data from the Insolvency Service revealed that the steepest decline in output in almost 30 years led to 19,100 people being declared bankrupt - a 22% increase on the fourth quarter of 2007.

A further 10,000 people took out individual voluntary arrangements (IVAs) under which interest on debt is frozen in exchange for set repayments each month.

The total of 29,444 people being declared insolvent was up 18.5% on a year earlier and was higher than during the recession of the early 1990s.

The 1.5% contraction in the economy in the wake of the financial market mayhem last autumn also claimed 4,607 companies - a 52% increase in liquidations on the October to December period of 2007.

Economists warned that the level of bankruptcies was set to increase as unemployment rose and the problems caused by the credit crunch meant people were no longer able to borrow their way out of trouble.

Howard Archer, chief UK and European Economist at IHS Global Insight, said: "Unfortunately, the marked rise in the number of individual insolvencies in the fourth quarter of 2008 is a harbinger of what is very likely to be seen through 2009.

"Deep economic contraction, sharply rising unemployment, higher debt levels, lower equity prices, and more and more people being trapped in negative equity will exact an increasing toll over the coming months.

"While the substantial cuts in interest rates by the Bank of England will obviously help some people, they are likely to be insufficient to save many from insolvency."

guardian.co.uk
 

TeamPlayer

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Has anyone here had to face bankruptcy, or known anyone who has? If so, how have you (or they), coped with the pressures?

I would imagine it must be a very difficult decision to take, whether it's because a business has gone bad, or whether it's a personal series of debts.
 
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