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Bankruptcies up, IVAs down
04 February 2008
The number of people declaring bankruptcy last year under the heavy burden of debt rose by 2.4 per cent from the record figure from 2006 to reach 42,165.
On the other hand, individual voluntary arrangements (IVAs) - another way of escaping debt - dropped by five per cent.
Both of these methods have a serious impact on credit ratings and can make it difficult for people who use them to get credit cards, mortgages or loans in future and if they do manage to get them they will often be at the highest rates.
Overall, the number of people declaring themselves insolvent in 2007 was slightly lower, though the Financial Times claimed this did not necessarily mean that the scale of the problem had shrunk.
The newspaper reported that rather than allow people to file for insolvency - a move which leaves banks to write off outstanding unsecured loans or credit card debts - they were making informal debt management plans.
