120,000 Brits hit the buffers in 2011

120,000 of us were declared bankrupt or forced to take out a Debt Relief Order (DRO) or Individual Voluntary Arrangement (IVA) in the last calendar year. This figure is the lowest compared to the previous four years, claims City accountants RSM Tenon. Given the grim economic backdrop, the slump appears surprising. How are many managing to keep going?

Staying solvent

In a word (or three), low interest rates. RSM Tenon claims that many property-owners are being - artificially, it would appear - being held aloft from the clutches of bankruptcy by relatively low out-goings. But that is a boon only for property owners.

"Interest rates have been held at half a per cent ever since March 2009 – a staggering and unprecedented situation," says Mark Sands, head of personal insolvency at RSM Tenon. "Many who would otherwise have been forced into bankruptcy are being kept afloat by the money they are saving on mortgage repayments."

North-south divide

For those who rent or don't have a mortgage and rely on income from other sources, the picture is less clear. Meanwhile Tenon claims that business in the north-west and north-east of England were more at risk of going bust than their southern neighbours in 2011. It claims 21,000 firms failed this year - and that the 'North-South divide' failure rate widened.

"Next year," says Sands, "we expect the number of insolvencies to hold steady, at roughly 110,000. However, when interest rates begin to climb back up – as they eventually will – we can expect a spike in the number of people hitting the rocks."
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