Debt hits record levels
By Christopher Hope, Business Correspondent 

(Filed: 05/02/2005)

The number of people unable to pay off their debts last year reached 46,651, the highest level since records began, comfortably beating 1992's figure of 39,794 personal insolvencies.

The Department of Trade and Industry said that the number of individual insolvencies rose to 13,013 between October and December, up 8pc on the previous three months and 35pc over the previous year.

Price Waterhouse Coopers said the rise in personal insolvencies was "an inevitable consequence of the unprecedented growth in consumer debt in the UK", with credit card debt standing at £56 billion. The accountancy firm forecast that "personal insolvencies could well reach 50,000 cases in 2005".

The Liberal Democrat party described the increase in individual bankruptcies as "deeply worrying". Vincent Cable, its treasury spokesman, said: "This is further evidence that high levels of personal debt are leading many people into financial difficulty and in extreme cases bankruptcy."

A large proportion of the bankruptcies were self-declared. Steve Treharne, head of personal insolvency at KPMG, said changes to laws it make it simpler to declare bankruptcy were making it a more attractive option for debtors.

The number of companies going into insolvency dropped in the last three months of 2004 with 2,938 liquidations in England and Wales in the fourth quarter, down by 0.9pc on the previous quarter and by 11.1pc on the same period a year ago.

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