With the economy in the UK continuing to take a battering, and with many people continuing to struggle with their finances due to debt levels and job losses, it is little surprise that many people have found themselves having to look at insolvency as the only way to get themselves out of a financial mess.

Recently released figures have indicated that more and more people are doing this, with the number of insolvencies in the UK said to have hit historic highs.

In the third quarter the number of people becoming insolvent soared, breaking the previous high seen in the summer.

It is thought that the surge in insolvency numbers is linked to the new Debt Relief Orders, which are aimed at low income families or individuals. Many of these quickie Debt Relief Orders have been taken out by those that have seen their income reduced of have lost their jobs. The figures were released by the Insolvency Service.

One industry official said: ‘Unemployment and falling house prices is the issue as people seek advice when they have less surplus income. This has led to the rise in DROs in particular and they will continue to rise as debt advisers become more familiar with them and begin to recommend them on a more regular basis.’

Another said: ‘Three months ago, people may have had some equity in their property, but now they may not necessarily have that. They may not be in a position to pay off their mortgage and may have to turn to DROs as a last resort.’

One economist added: ‘Unfortunately, it is highly likely that individual insolvencies will continue to rise for some time to come, despite current mounting signs that the economy will finally return to growth in the fourth quarter. Unemployment has already risen substantially and is likely to climb significantly further, many people are suffering wage freezes or even cuts, debt levels have risen and credit conditions remain very tight.’

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  4. Increased number of people face bankruptcy
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