According to professional services firm KPMG, the year 2009 possibly observes a record number of personal insolvencies with over 1, 50,000 people likely to be affirmed bankrupt in the UK.

The data analyzed by KPMG revealed that 2009 may see personal insolvencies arrive at record levels, with over 1,50,000 people coming into an individual voluntary arrangement (IVA), being affirmed bankrupt or entering into a debt relief order.

It has been indicated by KPMG that personal insolvencies may arrive at record levels, with more and more people are entering to IVAs. This would help the people to get rid of from such critical financial crisis situation.

IVAs provide assistance to an individual in monetary crunch situation to approach his creditors with a plan to reorganize his debts. This normally entails the debtor making regular reasonable monthly payments for a set time period, at the end of which the balance of the debts is written off.

"Most IVAs deal with personal loans, credit card balances and other kinds of unsecured debts.

According to Mark Sands, director of personal insolvency at KPMG, the borrowed amount is mainly utilized to meet 'present' expenditure comprising lifestyle items like holidays, or to cope with monthly shortage in the household budget, rather than to avail assets or to fund a business."

According to KPMG the total number of personal insolvencies in England and Wales as per the government's Insolvency Service bankruptcies and IVAs combined would amount to over 1,50,000.

Previous year creditors had to write off as a minimum 1.1 billion pounds in bad debts as numerous people had entered into IVAs.

The average IVA debtor owed 47,800 pounds and projected to pay back only 38 per cent of this sum.

KPMG expected that over 2,500 people entered into IVAs with debts more than 1,00,000 pound in 2008. Previous year around 37,000 people used the IVA process to write off a part of their debts.

According to KPMG estimates around 67,000 people were affirmed bankrupt in 2008, taking total number of personal insolvencies to around 1,04,000 last year.
KPMG added that 16 per cent of people had their IVA turned down by creditors. Whereas, several people who fail to derive an IVA sanctioned by creditors end up in bankruptcy, with others entering into debt management plans.