Insolvency and Debt Management is likely to rise

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Reduction in the number of insolvency in the 2nd quarter of 2008 has led to many people believing that this may be end of the recent economic downturn that has hit the UK. Some are assuming that this may the end of the worst, but the real question is, is this really the case?

As unpleasant and unfortunate as it may sound, this may come as a shock, which the reduction in insolvency and those who believe that that the worst is over could be in for a big shock. Financial analysts are expecting a major rise in insolvency, independent voluntary arrangements, bankruptcies and people taking out debt management plans. Several elements such as the behaviour of financial institutes, major lenders pulling out the market, rise in the price of commodities etc has made it difficult to predict what the situation lay ahead.

Banks and financial institutes are happy to keep those customers who they believe are in a position to repay their debts; which means the major institutes are looking to improve their lending portfolio. Coupled with the fact that analyst are expecting further drop in economy and worse of the forecast are yet to come. It gets even worse when we take into account the situation with housing market, unavailability of finance.

According to analysts, a larger share of companies going into administration in the 2nd quarter of 2008 is perhaps a more rational gauge of thing to come.

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