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IVAs, DROs and bankruptcies - an analysis

In the last final months of last year, 28,973 people in England or Wales entered a personal insolvency solution - an IVA, DRO or bankruptcy. R3, the leading professional association for insolvency professionals, has commented on the figures.

Frances Coulson, President of R3, warned of the emergence of 'zombie' debtors - people who are able to service their debt enough to stay out of formal insolvency, but aren't capable of actually reducing the amount they owe.

In other words, many borrowers are simply "hanging on", she said. They can just about cope at the moment, but increasing financial pressures - "wages remaining stagnant and utility bills rising" - are bound to prove too much sooner or later.

She also pointed out that the insolvency figures don't mention the numbers of people who are in some kind of informal debt procedure. R3 estimates that around half a million people are currently in a debt management plan, while plenty of others are simply struggling on their own, without any professional help at all.

Predicting that 2012 will be even tougher than last year, R3 recommends that people struggling with debts and other aspects of their finances get some advice now - "to prevent it becoming insurmountable".