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Insolvencies: debtors` petitions rising

On Friday 7th May, the Insolvency Service released its quarterly figures showing how many people had been declared insolvent - i.e. entered bankruptcy, an IVA, a DRO (Debt Relief Order), or a Trust Deed.

The Ministry of Justice (MoJ) has also released its figures, which show - among other things - how many of the bankruptcies were started by debtors and how many by creditors.

As the BBC reports, the MoJ statistics show that the number of so-called debtors` petitions in England and Wales in the first three months of the year rose by 20% (to 16,348) compared with the previous quarter, while creditors` petitions rose by just 4% (to 4,329).

There is, however, a seasonal element in these statistics, as Brian Johnson (an Insolvency Practitioner at accountants HW Fisher) pointed out: "There is often a rise in the number of debtors` bankruptcy petitions in the first quarter," he said, "as people make a huge effort to get beyond Christmas before they concede defeat."

The Insolvency Service provides historical data on bankruptcies by `petition type` (i.e. how many were started by debtors and how many by creditors).

In the last ten years, the number of bankruptcies per year has risen from 21,550 (in 2000) to 74,670 (in 2009).

The vast majority of that increase has been due to the increase in debtors` petitions: in 2000, there were 13,312, but by 2009 this had risen to 63,804. In that time, the number of creditors` petitions barely rose, going from 8,238 to 10,866.

So debtors` petitions, which made up 61.8% of bankruptcies in 2000, made up a full 85.4% of bankruptcies in 2009.

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