LONDON: Individual insolvencies in Britain reached an all-time high of 17,562 in the third quarter of 2005, an increase of 11.6 per cent on the quarter and 46 per cent on the year -- and the highest since 1960 -- according to the department of trade and industry-compiled figures.
The Britishers piled up more than a trillion pounds in debts aided by reduced borrowing costs and increasing property prices a couple of years ago. But, the interest rate hikes imposed by the Bank of England between November 2003 and August 2005 and a slowdown in the market put the households on a tight leash, which meant defaults in repayment of loans.
Economists predict that the worst is yet to come as the economic growth continues to slow down, even though the central bank had intervened and cut the interest rates once in August this year.
Bankruptcies too registered an all-time hight at 12,043, up 30.9 percent on the year. Individual agreements with creditors also grew 95 per cent on the year.
There has been a 66 per cent increase in the number of mortgage repossession orders in the third quarter in England and Wales. Company liquidations rose 0.3 per cent on the quarter to 3,389, 14.2 per cent higher on the year.
The government had reduced the time limit before bankrupts could be discharged, from three years to one and critics say the new system makes formal bankruptcy an easy, stigma-free option for people struggling to repay debts.
The government now intends to simplify personal insolvency and is considering new rules whereby people with debts of less than £15,000 could have them written off. The average bankruptcy term in the country is now just eight months, with 51 per cent of bankrupts discharged in less than a year.
Posted
on : Sat, 05 Nov 2005 08:25 GMT | Debt News
By : Chris Rowe
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