The number of people entering into insolvency in England and Wales rose to a record total of 134,142 last year, according to official figures from the Insolvency Service.
Rising unemployment and the ongoing impact of the credit squeeze drove the figure beyond the previous record of 107,288 personal insolvencies set in 2006.
Today's figures show a total of 35,574 individuals were declared insolvent in the final three months of last year, 24.9 per cent more than in the same period of 2008.
Although the number of bankruptcies fell by 5.5 per cent year-on-year to 17,007, the number of individual voluntary arrangements (IVAs) – where borrowers arrange to pay off a proportion of their debt over a set period of time –jumped by 26.3 per cent to 13,219.
A total of 5,348 of the insolvencies were in the form of debt relief orders (DROs) which were introduced in April last year and allow consumers with debts of less than £15,000 and minimal assets to write off their borrowing without entering into a full-blown bankruptcy.
Another agency releasing insolvency statistics, the Consumer Credit Counselling Service (CCCS) the UK's leading debt charity, has also revealed a steep rise in personal insolvencies during the past year.
In 2009, CCCS recommended insolvency to 39,663 of its clients, with 20,659 people coming to CCCS for help with their debt problems being recommended bankruptcy, 11,877 Individual Voluntary Agreements (IVA) and 7,127 Debt Relief Orders (DRO).
This is an annual increase of 93 percent in overall insolvency recommendations with CCCS recommending insolvency to 20,516 of its clients in 2008. It is an annual 31 percent increase for bankruptcy with 15,724 people being recommended it in 2008 and 148 percent increase for IVAs with 4,792 being recommended it in 2008.
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