Although the 34,743 individual insolvencies recorded in England and Wales during the second quarter of 2010 were down by 2.6% on the previous quarter debt experts have warned that a second spike in insolvency rates could be imminent.
"... more Britons are opting to go bankrupt ..."
Kevin Still, debt expert and director of Atlantic Financial Management, said that volumes of Individual Voluntary Arrangements (IVAs) have continued to rise, despite the overall dip in personal insolvency numbers quarter on quarter.
"We continue to see interest rates on credit card debts rising, which may be a stimulus for people looking at a formal debt solution," he said.
The large number of insolvencies was made up of 14,982 bankruptcies, which were down 20.6% on the corresponding quarter of the previous year, 13,466 Individual Voluntary Arrangements (IVAs), which were up 10.2% on the corresponding quarter of the previous year and 6,295 of newly-introduced Debt Relief Orders (DROs).
"... time to look at a long-term strategy to get finances under control ..."
Interestingly, 85.7% of bankruptcies recorded in the second quarter were made on the petition of the debtor, indicating that more Britons are opting to go bankrupt rather than creditors taking out the petition in order to recover debt.
Rises in the Bank of England base rate, which is currently at a record low of 0.5%, may also cause another insolvency increase, with Kevin Still urging debtors to take action whilst they can.
"Low or negative equity and treading water on debt repayments may be an opportune time to look at a long-term strategy to get finances under control and put in place a risk management strategy for when interest rates rise." He advised.