Bankruptcies hit record high (From The Wiltshire Gazette and Herald)

Bankruptcies hit record high

THE number of people declaring themselves bankrupt in Swindon has risen again and experts say it is spiralling out of control.

According to the figures from the Department of Constitutional Affairs, the number of people declaring themselves bankrupt in Swindon has gone from 44 between April to June last year to 93 in the same period this year a rise of 111 per cent.

This is the highest percentage increase in the south west.

In the first three months of the year 76 people declared themselves bankrupt in Swindon compared to 44 last year.

In the last year 75 per cent of all bankruptcies were people taking steps to have themselves declared bankrupt as opposed to being forced into bankruptcy by a creditor the highest proportion ever seen.

John Bangham, the director of personal insolvency for accountancy firm KPMG, said: "These figures do not paint a pretty picture and cannot be unrelated to the huge rise in mortgage repossessions and the increasing bad debts reported by consumer lenders recently.

"We have a major consumer debt problem and, if current trends continue, we could see annual bankruptcy rates at double the present level before we see any improvement.

"Only this week, the major credit providers have announced increasing exposure to bad debt.

"Lenders are going to have to review their credit risk and lending policies in light of this growing problem."

Bankruptcy has also been made a more accessible possibility with debtors able to file their bankruptcy petition online.

The statistics also revealed that a common alternative to bankruptcy Individual Voluntary Arrangements, a formal agreement between debtors and creditors, which sets out how the debts will be paid off over a number of years are also increasing.

In the quarter to June 30, 2005, 4,535 IVAs were agreed 51 per cent up on the previous quarter and in the year to June 30 there were 13,673 56 per cent up on the previous year.

These figures are the highest since records began.

Mr Bangham added: "A quiet revolution has happened here.

"Filing for bankruptcy has quickly become the easy way out for many people with unmanageable debts aided by technology and changes in the law.

"This situation is at risk of spiralling out of control.

"While we welcome Government initiatives to address the debt timebomb, these solutions will take years to show any impact.

"Consumer lenders and individuals need to take stock of this black cloud of debt and act now to do something about it."

Alison Dickinson, an insolvency expert for Swindon-based Monahans accountants, said: "The high increase in bankruptcies is mainly due to the fact that over the last few years it has become much easier to obtain unsecured credit.

"At this time the number of bankruptcies has risen drastically, due to consumer credit, rather than a downturn in the business cycle.

"New legislation reduces the automatic discharge time to just one year, or less when the Official Receiver has concluded his inquiries and files a notice with the Court.

"Those in financial difficulty should beware however, that the changes aren't all good news.

"Credit reference agencies still hold records for a number of years after a bankruptcy, and obtaining credit again, even if to buy a house, can be extremely difficult for a long time even after the bankruptcy period has been completed."