Bankruptcy increases at fastest rate in country

8:19am Saturday 17th May 2008

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BANKRUPTCIES soared in the North-East at three times the national average in the first part of this year.

Financial services company KPMG's analysis of figures, released yesterday by the Ministry of Justice, showed that the number of people declaring themselves bankrupt rose in the North-East by 34 per cent between January and March.

The statistics, for people petitioning for their own bankruptcy as opposed to being forced into bankruptcy by a creditor, show a rise from 544 cases in the fourth quarter of 2007 to 731 cases in the first quarter.

Sunderland saw the highest increase, at 77 per cent, followed by Newcastle at 31 per cent.

Nationally, the three months ended March 31, saw an increase of 11 per cent in the number of people making themselves bankrupt in England and Wales compared to the previous quarter.

At the same time, there was a dramatic decline in the use of Individual Voluntary Arrangements (IVAs), which dropped six per cent in the most recent quarter.

Paul Bateman, KPMG's head of personal insolvency in the North of England, said: "Consumers are seeing the cost of their mortgages increase, fuel costs continue to go up and now food prices are rising in a manner not seen for years.

"While many individuals will decide to take formal steps to deal with their over-indebtedness in the months ahead, driving personal insolvencies higher, many others may be able to take advantage of informal arrangements and tighter budgeting to avoid the worst effects of over indebtedness.

"The message to everyone in difficulty is to take advice on all the options."

According to KPMG's analysis of IVA data, the average debtor proposing an IVA in the last quarter owes a total of £48,200 while figures from the Insolvency Service show that the average bankrupt has debts of £50,828.