Insolvency Regional Statistics - Years: 2000 - 2009

This page contains the statistical data of insolvencies in the United Kingdom. For a better understanding of this data a brief introduction, to the terminologies used and the programs mentioned, is given below.

Insolvency

Insolvency procedure in England and Wales is mainly influenced under the Insolvency Act 1986. Insolvency is a condition where an individual or a limited company is unable to pay his due debt.

The recent recession has forced many organizations and firms to become insolvent. On the other hand individuals can be insolvent subject to an Individual Voluntary Arrangement (IVA), Bankruptcy Order or Debt Relief Order (DRO).

Let us discuss the basic details of these debt settlement programs.

Individual Voluntary Agreement (IVA)

In IVA debtor uses an Insolvency Practitioner (IP, a legal expert) to propose a repayment plan to his Creditors, usually, lasting five years. If at least 75% of the voting Creditors vote in favor of the IVA, it will be approved. IVA is binding on all unsecured Creditors, even those who did not vote in favor of it or abstained from voting.

The IVA is applicable to the cases involving a debt of over £15,000. The debtor must have a regular monthly income. The Insolvency Practitioner sends a notice of the IVA to the Insolvency Service and the information is then entered into the Insolvency Service's database.

When the IVA process is completed, the debtor is free of all unsecured debts included in the IVA.

Bankruptcy

Bankruptcy is a traditional way of eliminating unmanageable debts. A debtor is declared bankrupt by the order of County Court with Insolvency Jurisdiction or the High Court. The petition for bankruptcy may be filed by the Debtor, Creditors or even an IP.

Bankruptcy clears unsecured debts within one year. The minimum amount of debt owed should not be less than £750. Your assets including your personal residence can be sold to satisfy the debts owed by you.

Debt Relief Order (DRO)

The Debt Relief Order was introduced in 2009 to provide an alternative to Bankruptcy and IVA to the people with smaller volume of outstanding debts. This is typically the best option for the people with extremely low monthly income or no income at all.

Individuals with a debt of below £15,000 can also apply for a DRO.

Stats of Individual Insolvencies

Table.1 shows the statistics of individuals opting for different Debt Relief Options from 2000-2009, keep in mind that DRO was introduced in 2009. There has been a gradual increase in the insolvency occurrences according to the data shown below.

Year IVA Bankruptcy DRO Total
2009 47,641 74,670 11,831 134,142
2008 39,116 67,428 - 106,544
2007 42,165 64,480 - 106,645
2006 44,332 62,956 - 107,288
2005 20,293 47,291 - 67,584
2004 10,752 35,898 - 46,650
2003 7,583 28,021 - 35,604
2002 6,295 24,292 - 30,587
2001 6,298 23,477 - 29,775
2000 7,978 21,550 - 29,528

Table 1 Stats of Individual Insolvencies in England and Wales.

From the date given in the table you can easily assess that there has been a sudden increase in the total number of individual insolvencies from 2004 onwards. Debt Relief Order, was introduced on 6th April, 2009, got considerable responses as it gave relief to the people with extremely low income.

Company Liquidations

Table.2 shows the number of company liquidations from 2000 to 2009. Company liquidation is the process by which a company or a part of the company is brought to an end, and the possessions and assets of the company are reallocated among the stakeholders accordingly.

A Voluntary Liquidation means when the members of the company voluntarily windup the business.

Compulsory liquidation is due to the court order after the petition has been filed by the Creditors, secretary of the state or official receiver.

Year Voluntary Liquidations Compulsory Liquidations Total
2009 13,434 5,643 19,077
2008 10,041 5,494 15,535
2007 7,342 5,165 12,507
2006 7,719 5,418 13,137
2005 7,660 5,233 12,893
2004 7,608 4,584 12,192
2003 8,950 5,234 14,184
2002 10,075 6,231 16,306
2001 10,297 4,675 14,972
2000 9,392 4,925 14,317

Table 2 Company Liquidations in England and Wales.

The table two shows that, unlike individual insolvencies, there was actually a downfall in the number of insolvencies during 2004. However, a large number of companies were liquidated, especially, there was a sharp incline in voluntary liquidations due to the peak of recession.

For the Debt Solutions listed in this page, you have to understand all the consequences and costs before applying. Seek professional advice from certificated firms, IPs or registered charities; only after examining your case in details you could have a reasonable overview of your available options.

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