The headline figure of 25,264 individual insolvencies for the first quarter of 2008 gives cause for alarm as it does not include a key group of debtors. Those in Debt Management Plans (DMPs) do not show up in these figures as they do not need to be recorded or registered. DMPs are non-statutory solution to an individual's debt problems and have for many years exceeded the number of bankruptcies and IVAs combined.

Therefore R3 calls on the Government (and the Insolvency Service) to start recording DMPs to give the full picture.

Debt Management Plans can often become ‘debt slavery’ where there is no guaranteed write-off of any debt, no interest reduction or debt forgiveness. We have heard of such plans can running for decades, compared to an IVA’s typically 5-year term.

First quarter figures for 2008 released today by the Insolvency Service show an increase in the number of individual insolvencies of 1.7% on the fourth quarter of 2007. The number of IVAs has increased from 9,218 in the fourth quarter of 2007 to 9,614 in the first quarter of 2008 an increase of 4.3%.

Nick O’Reilly, President of R3 outlined the following concerns;

“The true number of individual unable to pay their debts in the UK could be three times higher than the Insolvency Service’s figures due to those in Debt Management Plans not being counted. R3 members, 97% of Insolvency Practitioners all over the UK, expect to see these figures continue to climb as the effects of the credit crunch seep through. I do not think we have seen the worst of it yet, as there is a time lag of at least six months as people go through the insolvency process.”

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