Bankruptcies, repossessions and mortgage arrears fall

Posted in 'Dealing with Debt' by Richard Catlin

17 November 2010

Figures released last week show that the number of individuals declaring themselves bankrupt in the UK fell to the lowest level since 2005, and that levels of mortgage arrears and possessions also fell in the third quarter of the year.

Optimism over both sets of figures has been tempered slightly, with experts warning that the worst is far from over.

13,907 people were declared bankrupt in the third quarter of 2010, down 24% on the same period last year, but this figure was offset somewhat by an increase in the number of people opting to take a Debt Relief Order (DRO) in the same period. The number of consumers opting for a DRO has increased steadily since they were introduced in 2009 as alternative to bankruptcy for people with debts of less than £15,000 and little or no disposable income or assets.

7068 DRO’s were issued in the three months to September, representing a 12% increase on the previous quarter. Individual Voluntary Arrangements (IVAs) dropped slightly in the same period – by 4% compared to 2009.

A combination of the traditionally expensive festive season, concerns over public sector job losses and tax increases in the New Year are just some of the reasons for warnings that levels could quickly increase again.

Meanwhile, the Council of Mortgage Lenders (CML) has called for Government support for homeowners struggling with mortgage repayments to be extended into 2011, despite the latest figures showing a drop in both the number of repossessions and the percentage of mortgages in serious arrears.

Figures released last week by the CML show that 8900 homes were possessed in the three months to September – 5% lower than the previous 3 months and the fourth consecutive fall.

The government’s mortgage interest assistance programme is believed to have played a significant part in helping to reduce the number of repossessions, but this was reduced by 40% in early October and uncertainty over the impact on the withdrawal of the programme has led the CML to urge caution.

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