The number of individual insolvencies looks set to triple between now and 2010, as rising interest rates start to bite, research claimed yesterday.

Around 13,000 couples in England and Wales applied for insolvency in 2006, 165 per cent more than in 2004.

advertisementBut the figure could rise even further to 50,000 by 2010, according to a report by the Manchester Business School for accountancy firm Haines Watts.

At the same time, the level of debt built up by couples who have declared themselves bankrupt or taken out an individual voluntary arrangement (IVA) has more than doubled - from £21,000 in 2004 to over £42,000 last year.

Dr Sydney Howell, at Manchester Business School, said: “Some of these couples, especially those in their early 30s, are facing a future with no pension, no savings and huge debts.

“Rising house prices and interest rates, ever-increasing living costs and wages that have not kept up with inflation have all produced crippling debts and left more and more people turning either to bankruptcy or insolvency as their only way out.”

Earlier this year, Government figures showed that a record number of 300 people a day were being declared insolvent or bankrupt.

The statistics showed that in the first three months of the year 16,842 people went bankrupt while 13,233 opted for an IVA, which is seen as a softer form of bankruptcy because the debtor is allowed to keep their home.

The figures are expected to have increased last quarter as interest rates push an increasing number of people into financial difficulties.

Gill Wrigley, insolvency practitioner for Haines Watts, said the group had seen an increasing number of couples applying for IVAs, particularly during the past 12 months.

She said couples accounted for just 10 per cent of the group’s clients in 2002, but the figure had now grown to 40 per cent and showed no sign of reducing.

She said: “Young couples, typically those turning 30 are vulnerable because they are in a transitional life-stage where they are settling down, buying a house and wanting to start a family, but still also spending a high proportion of their income on social activities.”

Professor Muir Hunter, an author on debt, said: “The worry is that people are spending all this money on credit cards without building up any solid assets.”


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