Pictured above: Andrew Appleyard

Figures from leading accountancy firm RSM Tenon reveal that Birmingham has been less affected by the economic downturn than other cities.

Birmingham saw a one per cent drop in personal insolvencies in 2010 with 3925 cases compared to 3960 in 2009, according to RSM Tenon Tracker which also shows the city has seen an estimated 25% increase in personal insolvencies since pre credit crunch days - which is less than the national increase of 28%.

Andrew Appleyard, director of personal insolvency at RSM Tenon's Birmingham office said: "In 2008 Birmingham had 3141 personal insolvencies and in 2010, there were 3925. Despite a 25% increase in personal insolvencies since 2008, this is less than the national increase of 28%."

With the VAT increase and the inevitable rise in interest rates combined with the public sector cuts, RSM Tenon is predicting continuing record levels of personal insolvencies throughout 2011.

Andrew said: "Using our RSM Tenon Tracker, we can see continued near record levels of personal insolvency in 2010. Around 130,000 to 135,000 people in the UK have used personal insolvency as a last hope for dealing with their financial troubles, which is still approximately 28% higher than pre-credit crunch levels. We expect that this figure will increase to around 140,000 over 2011 with the rate set to continue until the 2012 Olympics.

"The economic downturn has left people in a bad financial state and we expect this to continue through 2011 and into 2012. There really is no let up at the moment and many people will be struggling to see the light at the end of the tunnel when the upturn does arrive."

Statistics from RSM Tenon Tracker show that people over 66 were the fastest growing age group for personal insolvencies where women were increasing at a rate of four times that than men.

The introduction of Debt Relief Orders (DROs) in April 2009 has also had a significant impact on 2010's insolvency figures.  DROs more than doubled in 2010 over the 2009 figure making up 19% of all personal insolvencies of which two thirds (63%) were women (the same as last year).  

RSM Tenon Tracker's figures shows that the most common age group remains 36-45 who also make up the largest part of IVAs (36%) and bankruptcies (31%) but for DROs the largest age group is 26-35 (24%).

Andrew added: "The introduction of DROs in April 2009 and the subsequent number of people entering into them made them the story of 2009. We've seen this trend continue into 2010 and the figure has more than doubled over last year. DROs have grown in popularity as the benefits of a lesser associated stigma and no Court hearing are recognised.

"DROs now account for 19% of all personal insolvencies, this is amazing for such a new product and a reflection of how attractive they are to people in debt compared to bankruptcies or IVAs. IVAs have remained at a fairly steady 36-37% of all cases for the past three years so people are choosing DROs as an alternative to bankruptcy."

DROs allow consumers with debts of less than £15,000, and minimal assets or surplus income, to write off their debts without entering into a full blown bankruptcy.