Could debt mismanagement force more people to go bankrupt next year?
Personal insolvency levels are predicted to have increased during the third quarter of this year as consumers struggled to manage their debts amid rising unemployment and soaring food and fuel costs.
KPMG expects official figures to show that 27,000 people were declared bankrupt or entered into an individual voluntary arrangement (IVAs) in the three months to the end of September, up from 24,553 during the previous quarter.
Bankruptcies will account for 17,000 cases, while IVAs will make up the remaining 10,000, the accountancy firm claims. An IVA is a formal agreement between a debtor and their creditors under which the debtor makes reduced payments in order to pay off a percentage of what they owe.
KPMG said insolvency levels are likely to continue rising in the months ahead and could hit a record high next year. "During 2009, we think this figure is likely to dramatically increase to 150,000, as factors such as rising unemployment also start to take hold," said director of personal insolvency Mark Sands.
According to figures from Credit Action, total UK personal debt increased by 5.4 percent in the 12 months to September to reach £1,457 billion. The average UK household now owes £9,740 excluding mortgages.
