May 6 2009
Commenting in response to Q1 2009 figures announced by the Insolvency Service, Stuart Bungay, Director of Financial Services, TDX Group said: "According to our data the numbers of homeowners resorting to IVAs continues to rise, representing around 51% of all IVAs compared to 34% at the beginning of 2008.

“This is largely due to a combination of house price depression and fewer options for refinancing, leaving more homeowners with no choice but to enter formal insolvency arrangements. These people, should they fail to maintain their IVA, could end up increasing repossession figures.

“TDX Group analysis indicates that of all IVAs activated around 40% are never completed and that 15% stop paying in the first year.

"We also believe a growing number of people are finding themselves without any means to pay their debts, and are consequently unable to meet the criteria required by either an IVA or a Debt Management Plan.

"Unfortunately there is very little data on this population and as a result, we may all be underestimating the amount of people who will take out a Debt Relief Order. Introduced last month, DROs are designed to provide a cheap, accessible insolvency option for individuals with relatively low levels of debt but little or no prospect of repaying.

“Estimates for take up of DROs in the first year currently range from 14,000 to 150,000. If the top estimate is correct, this could equate to around £1.8 billion of debt. It’s going to be critical that creditors maintain good data about DROs over the next year if the industry is to get any understanding of the true extent of debtor distress.”