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The number of asset-less debtors going bankrupt has reached such levels that the cost of processing these bankruptcies is becoming unsustainable for the Insolvency Service, according to Stephen Speed, chief executive and inspector general of the Insolvency Service, who was speaking at the recent Insolvency Today annual conference.

While this news of asset-less debtors using our easy bankruptcy laws to start afresh is encouraging, Speed also said that a point had almost been reached whereby taxpayer money would be required to cover the shortfall of the processing costs, which, according to reports, seems likely given that the Insolvency Service was forced to write of £81 million earlier this year.

Try the Banks

No, you're not having any of it back

Following the great taxpayer robbery of the banking bailouts – where free-market profit-chasers brought the world to its knees with their financial jiggery-pokery and eye-watering bonuses and then went cap in hand to the state when it all blew up – the idea of more taxpayer money being required to plug a hole, this time to cover the mistakes of individual borrowers, will no doubt result in more opprobrium being directed at debtors by the more pious sectors of society. Yet, and now stop me if this sounds ridiculous, surely it would be better to assess each individual’s case and try to determine whether the lenders had been at all culpable and had irresponsibly lent to people they knew would have little chance of paying the money back?

Making the banks pay for their mistakes and their greed – what a ridiculous notion.

Thou shalt remain in servitude

The latest insolvency statistics were released yesterday and, as usually follows such announcements, the comment threads of news sites were awash with the protestations of indignant moralisers, complaining about the unjustness of it all – at how people can simply walk away and leave a trail of bad debts. Perhaps these preachers should stop for a moment to consider the absurdity of their outdated position?

Post- economic crisis, the banks have been bailed out leaving the citizens of this country to bear the brunt of savage cuts, which are the result of a huge deficit caused by the bankers’ unchecked greed and recklessness. Yet nothing has changed – the rotten system remains unfixed, and huge bonuses are being paid out once again. Proof of a return to ‘avarice as usual’, on the part of the global elite, was confirmed by Bob Diamond, CEO of Barclays, who last month brazenly told the Treasury Select Committee that, “there was a period of remorse and apology for banks and I think that period needs to be over”.

Ten Hail Marys...

In light of the gross inequalities of a rigged system – where the rich and powerful continue to profit and the masses take the pain – crying foul over those at the bottom freeing themselves from the debt shackles handed to them by the global lever pullers, is to effectively disseminate the banks propaganda for them, helping to keep the system functioning. 

A People’s Bailout

So the bankers have had their bailout and announced that their period of penance is over, but what of the millions of indebted people who don’t have anyone coming to their rescue? The people have an escape route too – in the form of easy insolvency laws. So if you’re over-indebted then don’t think twice about opting to bail out. Certainly don’t listen to the howls of righteous indignation as you announce your decision. Grab the parachute, take the leap, and float down into the land of freedom…

Can't handle life in a cage man

Beneath the headlines lies the truth

The latest insolvency figures were published today and the headlines were all about the fact that there had been a sharp drop in personal bankruptcies during the third quarter of 2010 (the lowest level for five years). However, the total number of people declared insolvent during this period only fell 3.7% on the same period a year ago. This is because other forms of insolvency, Individual Voluntary Arrangements (IVAs) and Debt Relief Orders (DROs), have become more popular. It’s not that fewer people are struggling with debt and deciding to walk away from it, it’s just that they are choosing to free themselves in a different way.

My personal view is that this slight dip in insolvencies will be very temporary. Once the impact of the government cuts are felt, and if interest rates rise (they have to someday), those on the precipice will be tipped over the edge. 

80% Choose FreedomBy George! It's so easy to choose life and walk away from dreary debt

Another interesting fact was revealed in a statement from an insolvency practitioner, who said that,

 “More than eight out of 10 bankruptcies were made on petition of the debtor, which shows that many people have had enough and are throwing in the towel. They have been living with the pressure of debt for too long.”

So eighty percent of bankrupt’s chose this option for themselves rather than being forced into it, a heartening statistic that demonstrates that people are waking up to the fact that they can easily free themselves from the scourge of debt and the rule of the banks.

 

This Friday sees the release of the annual insolvency tally for 2009, with more alarming statistics expected to highlight our ongoing struggle with over-indebtedness.

Did you make the 2009 Honours List?

As a result of our appetite for credit, and the bank’s willingness to feed it, individual insolvencies in England & Wales have more than doubled since 46,650 people were declared insolvent in 2004. 2008 saw a total of 106,544 people either declared bankrupt, or using Individual Voluntary Arrangements to reduce their debts, (an increase of 128% in four years).   

Figures for the first three quarters of 2009 suggest that the past year will be another record-breaker, with at least 130,000 people expected to have been declared insolvent.

The 2009 figures would surely be much worse, were it not for artificially low interest rates, which are currently enabling many to keep their heads just above water and remain solvent. With 2010 likely to see these extraordinary measures gradually being removed, record bankruptcies will continue to make future headlines.   

The 2009 insolvency figures will be released by the Insolvency Service Friday 5 February 2010 at 9.30 a.m.

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