Recently published statistics from the government’s Insolvency Service, show that more than 23,000 people became insolvent in England and Wales during the first three months of 2006.
That represented a 73% rise on the same period last year and gave further credence to the view that 2006 could see record levels of personal insolvency.
Paul Walshe, Head of Lender Services at Moore and Blatch said “For several years now lending has boomed to fuel the growing ‘buy now, pay later’ culture. This has been supported by rising property prices, coupled with low interest rates and stable unemployment to create high consumer confidence.
“But these figures from the Insolvency Service show that debt has spiralled out of control for thousands of individuals. More than 100,000 people are likely to enter IVAs this year. In recent months, more stable house prices, the potential for interest rate rises and rising unemployment are starting to bring a dose of reality to the consumer.
“The CML has already reported rises in arrears and repossessions over the past year and these statistics give a strong indication that tougher times may be around the corner for lenders. Now would be a good time to review and tighten procedures for arrears management and shortfall recovery.”