UK bankruptcies fall 31%

BANKRUPTCIES IN THE UK have dropped significantly in the last 12 months according to the latest government statistics.

In the first quarter of 2011 there were 12,539 bankruptcies, a fall of 31.3% on the same quarter a year ago, the Insolvency Service report shows.

The year-on-year fall also represents an increase on the last three months, though, which saw 12,028 bankruptcies lodged.

Overall personal insolvency processes fell 15.5% to 30,162, compared to the first quarter of 2010.

Individual Voluntary Arrangements (IVAs) – which contracts a debtor to repay a percentage of debts over a period of time – also dropped to 10,835, an 8% decrease on the same period last year.

Louise Brittain, partner in Deloitte's insolvency team, said: "It is concerning that people do not appear to be seeking advice in dealing with their debt through a formal process. These figures must not mask the fact that the crippling effects of personal debt are still very much being felt by households across England and Wales.

"The economy as a whole still remains fragile with households feeling the squeeze from high inflation, tax rises and the prospect of job losses; we cannot count on this positive trend continuing as the year goes on."

PwC's personal insolvency partner Pat Boyden said: "The big story with this quarter's statistics is the massive fall in bankruptcies, which are almost a third down on the same time last year. Evidence suggests that people are struggling more with their day-to-day financial pressures such as utility bills rather than their levels of existing debt.

"IVAs also continued to fall this quarter amid evidence that some of the big IVA houses are actually beginning to turn work down. This is due to the reduced profitability of IVA work now as fees are paid on a percentage of the assets in the IVA, which have been falling over the last few years. This is a slightly worrying development because it could mean that certain individuals are denied a form of release from their debt problems.