Money & Stats: Record Bankruptcies in England & Wales

The number of people in England & Wales unable to pay their debts hit a record high in the fourth quarter of 2004. The data from 'The Department of Trade & Industry' (DTI) indicates that the many recent interest rate hikes are starting to 'hurt'. The number of individual insolvencies rose to a seasonally adjusted 13_013 between 2004-10 and 2004-12, up 8 per cent from the previous three months and up 34.6 per cent from a year before. This is the highest level of personal insolvencies since records began in early 1960s, the DTI said.
'The number indicates that higher interest rates have increasingly pushed heavily indebted people over the edge', said one economist.
'The Bank of England' raised borrowing costs five times between 2003-11 and 2004-09 by a total of 1.25 per cent.
Many analysts say that it is too early to call a peak in rates at their present level of 4.75 per cent although they will probably stay steady for several more months.
With overall consumer debt already topping 1_billion_GBP (i.e. one million million pounds, or what the North Americans call a 'trillion'), the latest figures highlight the risks for the economy as interest rates rise. The latest 'Bank of England' data showed growth in both consumer credit and mortgage lending accelerated in 2004-12. The DTI said the total number of insolvencies was made up of up of 9_803 bankruptcies and 3_120 'Individual Voluntary Arrangements' (IVAs). Note: IVAs allow debtors to come to an agreement with their creditors. 'Insolvency Figures Bite' Yahoo! Business News, 2005-02-04, Fr 02:48 PM


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