According to statistics from RSM Tenon’s online early warning system, Tracker, the North East represented 6 per cent of all personal insolvencies in the second quarter of 2012 which was an 9 per cent increase on the previous quarter. In the period April to June 2012, the North East had 29 adults using a personal insolvency solution every working day.
Mark Sands, Head of Personal Insolvency at RSM Tenon said ‘In the last twelve months there have been over 113,000 personal insolvencies nationally but in 2012, the expectation is that England and Wales will only just surpass 100,000 and will continue in this vain for a number of years to come unless interest rates rise. In the same period, the North East had nearly 7,000 approximately 6 per cent of all insolvencies.
Mark continued ‘When the base rate was reduced to just 0.5% in March 2009, the lowest rate in living memory, it is no coincidence that a year later personal insolvencies started a downward trend resulting in 8 of the last 9 quarters registering a fall. The low base rate has actually protected homeowners and minimised unemployment levels but as soon as we start to see an increase in the base rate I am sure personal insolvencies are likely to follow but in the meantime personal insolvencies will be benign’.
When reviewing the number of personal insolvencies against the population a ratio can be prepared to confirm the number of insolvencies per 10,000 adults. The national average is 26 for the last 12 months whereas in the North East, the ratio was 34 proving the region is in a worse position than the national average.
Debt Relief Orders, an insolvency solution for people with low levels of debt have also grown in popularity nationally from only 22 per cent of total insolvencies in quarter one of 2011 to approximately 29 per cent in the latest quarter, and are now on par with bankruptcies.
DROs are only available for people with minimal assets and spare income and debts of less than £15,000 which proves how desperate some situations which appear manageable for most have become for so many.
In the North East, DRO’s represented 31 per cent of the region’s insolvencies with Individual Voluntary Arrangements 44 per cent and Bankruptcies 25 per cent.
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