By Elliot Wright, 5th February 2010
A record number of Briton's were declared bankrupt last year
while a further one million individuals struggling with debts are
not seeking help from their creditors.
The Insolvency Service is expected to reveal today that an
all-time high of 130,000 struggling borrowers entered into debt
arrangements including debt relief orders, individual voluntary
arrangements and bankruptcy during 2009.
However, research by insolvency firm R3 suggests that a further
961,000 heavily indebted individuals are suffering in silence and
not asking for help.
A further 574,000 have contacted their creditors informally for
help and an estimated 500,000 are in debt management plans not
recorded by the Insolvency Service.
R3's president, Peter Sargent, said: "Formal insolvency figures
only show so much. Outside of formal insolvency there are a huge
number of individuals in financial distress or informal
arrangements. The debt iceberg is much deeper than it first
appears."
A further 961,000 heavily indebted
individuals are suffering in silence and not asking for help.
He added: "Although it can seem scary, being honest with
creditors is a helpful step and can prevent formal insolvency in
the long run."
Despite the UK officially exiting the recession it is expected
that personal finances will suffer for some time to come and
insolvencies will continue to rise.
Financial firm Deloitte expect there will be 145,000
insolvencies this year, with R3 putting the figure at 153,000.
Louise Brittain, from Deloitte's insolvency arm, said: "'With
increasing financial pressures combined with rising unemployment
levels, the number of creditors pursuing debts will undoubtedly
rise out of necessity; and as debt relief orders becoming more
widespread, it is inevitable that we will see a consequent rise in
the number of people filing for bankruptcy. The figure has yet to
peak, and unfortunately 2010 will only see current figures
rise.'
Claims Financial