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| Personal insolvencies at five-year low | Personal insolvencies at five-year low |
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| Personal insolvencies in England and Wales fell to a five-year low in the first quarter of 2013, latest official figures show, despite the ongoing squeeze in household budgets. | Personal insolvencies in England and Wales fell to a five-year low in the first quarter of 2013, latest official figures show, despite the ongoing squeeze in household budgets. |
| A total of 25,006 people were declared insolvent in the first three months of the year, a decrease of 12.9% on the same period of 2012 and down slightly on the 25,454 recorded in the previous quarter, according to data from the Insolvency Service. | A total of 25,006 people were declared insolvent in the first three months of the year, a decrease of 12.9% on the same period of 2012 and down slightly on the 25,454 recorded in the previous quarter, according to data from the Insolvency Service. |
| In the 12 months ending in the first quarter of 2013 one in 419 adults became insolvent, down from one in 405 in the previous quarter. However, the Insolvency Service said the current rate was "still elevated" compared to the annual average of about one in 1,600 adults recorded over the past 25 years. | In the 12 months ending in the first quarter of 2013 one in 419 adults became insolvent, down from one in 405 in the previous quarter. However, the Insolvency Service said the current rate was "still elevated" compared to the annual average of about one in 1,600 adults recorded over the past 25 years. |
| The quarterly total is made up of bankruptcies, individual voluntary arrangements (IVAs), where debtors come to an arrangement with their creditors to repay part of their borrowing over an agreed period, and debt relief orders (DROs), a form of insolvency aimed at non-homeowners with debts of up to £15,000. | The quarterly total is made up of bankruptcies, individual voluntary arrangements (IVAs), where debtors come to an arrangement with their creditors to repay part of their borrowing over an agreed period, and debt relief orders (DROs), a form of insolvency aimed at non-homeowners with debts of up to £15,000. |
| The number of bankruptcies was down 27% on the first quarter of 2012 at 6,663, while IVAs were down 4.9% at 11,124. | The number of bankruptcies was down 27% on the first quarter of 2012 at 6,663, while IVAs were down 4.9% at 11,124. |
| DROS, which had been rising consistently since their introduction in April 2009, have now fallen for two successive quarters, with 7,219 registered in the first three months of the year. The figure is down 8.6% on the same period of 2012. | DROS, which had been rising consistently since their introduction in April 2009, have now fallen for two successive quarters, with 7,219 registered in the first three months of the year. The figure is down 8.6% on the same period of 2012. |
| The Insolvency Services figures show an ongoing increase in the proportion of bankruptcies initiated by creditors: in the first quarter of 2013, 19% were requested by creditors, a marked change from the start of 2009 when it was 14%. | The Insolvency Services figures show an ongoing increase in the proportion of bankruptcies initiated by creditors: in the first quarter of 2013, 19% were requested by creditors, a marked change from the start of 2009 when it was 14%. |
| The recent falls in insolvency levels follow steep rises between 2004 and 2010, which took the number to a quarterly peak of 35,682, or 566 people a day. | The recent falls in insolvency levels follow steep rises between 2004 and 2010, which took the number to a quarterly peak of 35,682, or 566 people a day. |
| The figures for company insolvencies have also declined year-on-year. There were 3,619 compulsory liquidations and creditors' voluntary liquidations in the first quarter of 2013, a decrease of 5.3% on the previous quarter and 15.8% on 2012. | The figures for company insolvencies have also declined year-on-year. There were 3,619 compulsory liquidations and creditors' voluntary liquidations in the first quarter of 2013, a decrease of 5.3% on the previous quarter and 15.8% on 2012. |
| Nick O'Reilly, insolvency practitioner at chartered accountants HW Fisher & Company, said the business figures showed "the economy is resilient, if not quite rebounding". | Nick O'Reilly, insolvency practitioner at chartered accountants HW Fisher & Company, said the business figures showed "the economy is resilient, if not quite rebounding". |
| He added: "The fall in individual insolvencies is encouraging too, but what we must not forget is that many households remain excessively leveraged. When interest rates rise there is every chance the individual insolvency rate will rise again – and potentially sharply." | He added: "The fall in individual insolvencies is encouraging too, but what we must not forget is that many households remain excessively leveraged. When interest rates rise there is every chance the individual insolvency rate will rise again – and potentially sharply." |
| Delroy Corinaldi of debt advice charity StepChange said that while the decline was welcome, the impact of the credit boom was still working its way through the system. | Delroy Corinaldi of debt advice charity StepChange said that while the decline was welcome, the impact of the credit boom was still working its way through the system. |
| "The declining levels of personal insolvency suggests that large debt levels may be declining. However, we know that the pattern of debt is beginning to change as households are increasingly falling behind on priority living costs such as council tax, energy bills and rent," he said. | "The declining levels of personal insolvency suggests that large debt levels may be declining. However, we know that the pattern of debt is beginning to change as households are increasingly falling behind on priority living costs such as council tax, energy bills and rent," he said. |
| "Against this harsh economic backdrop it is crucial that households are given financial breathing space and help to manage their debts in the short-term – however the blunt instrument of insolvency does not help consumers to address such problems." | "Against this harsh economic backdrop it is crucial that households are given financial breathing space and help to manage their debts in the short-term – however the blunt instrument of insolvency does not help consumers to address such problems." |
| Charles Turner, president of the Insolvency Practitioners Association, said: "The figures released this morning do not, in my opinion, reflect the reality of life for a great number of consumers who are undoubtedly struggling as wage growth flatlines and their household costs continue to increase." | Charles Turner, president of the Insolvency Practitioners Association, said: "The figures released this morning do not, in my opinion, reflect the reality of life for a great number of consumers who are undoubtedly struggling as wage growth flatlines and their household costs continue to increase." |
| Turner said it was likely that many people were turning to cheaper debt management plans. "Indications are that numbers have grown significantly, partly because they are perceived to be a more cost-effective alternative to a formal insolvency process." | Turner said it was likely that many people were turning to cheaper debt management plans. "Indications are that numbers have grown significantly, partly because they are perceived to be a more cost-effective alternative to a formal insolvency process." |