UK bankruptcies expected to increase

Bankruptcies in the UK are expected to have increased by more than a quarter year-on-year, according to new figures.

06:01 31 October 2005

Bankruptcies in the UK are expected to have increased by more than a quarter year-on-year, according to new figures.

Analysts said the rise from 36,000 last year to 46,000 this year was primarily due to creditors and individuals taking advantage of more liberal bankruptcy laws.

In 2002, the discharge period under which a bankrupt could not have a normal financial life was axed from three years to one.

Critics claim financial experts are partially to blame for the higher bankruptcy rate as they encouraged people to borrow more over the past few years.

The Financial Mail on Sunday said the rise was also to blame for the increase in 'lifestyle' bankruptcies.

'Lifestyle' bankrupts are those who prefer to go bust rather than face their creditors.

The worst period on record was the recession year of 1992, when 36,794 bankruptcies were reported.

Official figures for bankruptcy petitions in England and Wales in the second quarter of 2005 showed a rise from creditors of 23 per cent to 5,419. Petitions from debtors themselves rose by 27 per cent to 9,285.