Personal insolvencies rise by 8%
The number of people going insolvent in England and Wales between April and June has climbed by 8% on the previous quarter, official figures show.
Some 27,029 people slipped into personal insolvency in the second quarter of this year, which also marked a 5% increase on the same period in 2013.
The upswing has been caused by a 20% rise in people taking out individual voluntary arrangements (IVAs), where money is shared out between creditors, compared with a year earlier.
Matthew Chadwick, business restructuring partner at accountancy and business advisory firm BDO, said the overall increase in personal insolvencies is a sign of the improving economy.
He predicted that the housing market revival could prompt further upswings in personal insolvency in the coming months as creditors see their prospects of realistically being able to claw back people's debts increase.
He said : "Now property prices are rising, creditors are more likely to think about recouping long-standing debts. A continuing rise in the number of personal insolvencies in the next 12-18 months is therefore likely.
"Putting cash into savings has not been attractive with interest rates at rock bottom. But individuals, especially homeowners with unsecured debt, should consider shoring up their finances and replenishing their savings now, if only to avoid sleepless nights later.
"With the economy looking more healthy, those with bad debts are now more likely to be asked to pay them back."
Mr Chadwick continued: "Today's rise in individual voluntary arrangements is typical at our position in the economic cycle and need not be cause for alarm.
"There are many signs of a strengthening recovery including rising wages, record employment figures and increased retail spend: this, paradoxically, is another one of them."