(PRWEB) August 18, 2010

As the latest Insolvency statistics for the second quarter are revealed, Debt Free Direct urges consumers to exercise caution with personal finances and seek debt advice if needed. Statistics released from the Insolvency Service last week have shown personal insolvencies increased by 5% on the same period of 2009.

These quarterly released figures report a total of 34,743 people in England and Wales became insolvent during the three months leading up to the end of June. When compared to the first quarter of 2010, in which insolvency figures reached the highest levels on records, this does show a 2.6% decrease. However, despite figures having dropped slightly from the previous quarter’s record highs, this year-on-year increase is a continuation of experts’ predictions, with many warning of the possibility for a second spike in insolvency figures.

Debt Free Direct’s Insolvency Director, Derek Oakley, commented on the statistics, “This 5% year-on-year increase in personal insolvencies shows consumers are still struggling in the wake of the credit crisis. Consumers are advised to continue to be cautious with their finances and seek debt advice sooner rather than later if they are experiencing difficulties meeting their financial commitments.”

The Government’s cuts to public spending and tax increases alongside continued redundancies and the increase of interest rates on credit card debt could all contribute to another peak in personal insolvencies. Derek Oakley stated, “While we have seen a decrease on Q1’s figures, the UK economy is clearly still recovering and showing there is still potential for a second peak in insolvencies.”

The insolvencies recorded for this period were made up of 14,982 bankruptcies, 13,466 Individual Voluntary Arrangements (IVA), and 6,295 Debt Relief Orders (DRO). While this showed the number of bankruptcies was down 20.6% on the corresponding quarter of last year, the number of Individual Voluntary Arrangements was up 10.2% on the same period in 2009.

The decrease in the volume of bankruptcies could be partially explained by an increasing number of people opting for the Debt Relief Order, an alternative debt solution introduced in April last year. Interestingly, 85.7% of bankruptcies from this latest quarter were made on the petition of the debtor – which suggests more and more people are choosing to declare themselves bankrupt rather than creditors taking out the petition in order to recover the debt.

Debt Free Direct is the leading provider of Individual Voluntary Arrangements in the United Kingdom and offer free and impartial debt advice. For more information on insolvency, debt solutions or for debt advice, visit Debt Free Direct at http://www.debtfreedirect.co.uk.

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