500,000 to fall into personal insolvency in three years

My Account
Logout

Create an Evening Standard Account

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Welcome! Sign in here

Use your social network

Save time by using your existing account to sign in to Evening Standard

We'll never share your information or post anything to your account without your permission

Forgot your password ?

Registration

* indicates fields that are mandatory

Email *

Password *

Confirm Password *

First name *

Surname *

Postcode *

Country *

Mobile phone number

Username *

Gender *

Year of birth *

When you sign up...

You will have access to all our online competitions, discounted offers and can post comments on our site.

You will also receive The Weekender newsletter sent every Thursday - it’s full of fantastic offers and ideas for the weekend. You can update your email preferences in your account page when you log in.

Other newsletters and emails

Homes & Property Newsletter - Yes I want to receive the weekly email with all the latest news on property in the capital

Occasionally we would also like to send you relevant emails detailing specific offers either from ourselves or carefully selected partners. If you would prefer not to receive these then please tick the appropriate boxes below. We will never pass on your details.

I do not want to receive additional offers and information from the Evening Standard

I do not want to receive additional offers and information sent by Evening Standard on behalf of carefully selected partners

Terms and Conditions

* I have read, understood and agree to be bound by the terms and conditions of Evening Standard

Registration

Mail Sent for Registration Confirmation.

A confirmation email has been sent. Please activate your account by clicking on the activation link sent in your mail box.

Levels of personal insolvency are expected to rise to record levels as the recession takes hold and unemployment soars.

Official figures today show the number of insolvencies rose nine per cent to 27,087 in the third quarter.

The total is expected to hit around 110,000 for the year as a whole and at current rates 275 people a day are falling into insolvency or bankruptcy.

This is likely to be the start of an insolvency explosion as consumers who took on too much mortgage, bank and credit card debt find they are unable to cope.

Vicky Redwood, UK economist at Capital Economics, predicted the total will hit 140,000 next year, rising again in 2010 before peaking in 2011. Over the three years it is likely that as many as 500,000 people will have been forced into bankruptcy or other forms of personal insolvency, she said.

The figures are far higher than in the last recession in the early Nineties, partly because levels of debt are much higher, but also because new laws have made it easier to recover from bankruptcy. Outstanding personal debt now stands at just under £1.5trillion.

The expected wave of insolvencies will place extra strains on banks as they are forced to write off billions of pounds of loans.

Banks are also taking a harder line with borrowers who might previously have been able to take out new loans to tide themselves over.

Stephen Grant, insolvency partner at accountants Wilkins Kennedy, said: "The number of personal insolvencies is likely to go through the roof as falling house prices and rising unemployment begin to bite."

Louise Bond, personal finance manager at comparison website uSwitch.com, said insolvency or bankruptcy should "be the last resort for anyone with financial problems as they have a very serious impact on people's credit histories".

Today's figures from the Government's Insolvency Service also show a rise in the number of company liquidations, up 26.3 per cent in a year to 4,001 in the three months to the end of September. The number of larger firms going into receivership or administration is up 70 per cent to 1,277.