Debt Crisis Bites: 14% Rise in Personal Bankruptcies

4.06.30pm BST (GMT +0100) Fri 1st Aug 2003

Bankruptcies for individuals have increased by 14% in the Second Quarter of 2003 against the same period last year according to new Government figures released to day. They are up 6.3% on the last quarter.

Almost 25,000 people in the last year have been served with bankruptcy orders after being taken to Court by their debtors. These figures include individuals and some small businesses.

Number of Insolvencies in England and Wales (seasonally adjusted);

Percentage change

2002 2002 2002 2003 2003 Q2 2003 on:

Q2 Q3 Q4 Q1r Q2p Q1 2003 Q2 2002

Individuals 7,596 7,779 7,967 8,146 8,662 +6.3 +14.0

p = provisional, r = revised

Source: DTI STATISTICS RELEASE: INSOLVENCIES IN THE SECOND QUARTER 2003

Vince Cable MP, Liberal Democrat Shadow DTI Secretary, said: "The growing debt crisis is already beginning to bite. With personal bankruptcies soaring, people may regret borrowing so much if the economy turns even slightly."

"Aggressive lenders must be reigned in and people must be made more aware of the dangers of imprudent borrowing."

"Repossessions of goods and homes are the modern day equivalent of the Debtor's Prison. It may not be long before the bailiffs see their own business boom, and ordinary people begin to fear every knock at the door."

ENDS (see Notes to Editors)

Notes to Editors

1. Bank of England figures show that lending to individuals

grew by a record £10bn in June.

2. Vince Cable has unearthed ONS figures which show average

household debt has grown by over 50% since 1997. In contrast, average household income has grown by only 23%. Average annual household debt now outstrips average annual income by 30%. In 1997, average annual household debt was only 5% higher than average annual income.

3. The DTI Figures can be found at :

http://www.wired-gov.net/WGLaunch.asp?ARTCL=18948

For individuals the term bankrupt is used to indicate insolvency. Insolvent individuals in England and Wales are dealt with mainly under the Insolvency Act 1986. A bankruptcy order is made on the petition of the debtor or his creditor when the Court is satisfied that there is no prospect of the debt being paid.