The number of people declared insolvent in England and Wales fell by 2.6 per cent having edged down from record highs hit in the first quarter to 34,743, but were still 5% higher than a year ago after consistent rises in recent years.
Broken down, the figures revealed that 14,982 people went bankrupt in the spring months, down 20.6 per cent year-on-year.
That is also markedly down on the 18,256 recorded in the first three months of 2010.
However, the number of people starting an individual voluntary arrangement (IVA) increased to 13,466 in the latest quarter – up 10 per cent on last year.
Insolvency specialists have warned today’s figures may prove to be only a temporary reprieve from the stormy times ahead.
It is widely thought swingeing Government spending cuts could force many more people into insolvency as it impacts on the job market through redundancies with companies that rely on Government departments for the majority of business.
Also Frances Walker of the Consumer Credit Counselling Service (CCCS) said she expects spending cuts to have a negative impact on insolvencies. She said: “I think we are going to see more people being declared insolvent, and it will especially affect women as there are a lot of women employed in the public sector. “They are not all high-paid civil servants sitting on a good pension – there are a lot of lower paid people in the public sector as well.“
Ms Walker added that self-employed individuals may also feel the squeeze in the months to come.
Today’s statistics also show a continued growing trend of people being granted debt relief orders (DROs).
DROs offer an alternative to bankruptcy for people with debts of less than £15,000, assets of less than £300 and less than £50 surplus income a month.
In the three months to June, 6,295 DROs were granted, up from 5,644 in the previous quarter.
Ms Walker said: “Debt relief orders seem to be bringing relief to a cohort of people who need them. They appear to be a very successful way to help less well-off people.“
Company liquidations fall
The number of companies in England and Wales going into liquidation has fallen by almost 20% in the second quarter of 2010 compared to a year ago.
The Insolvency Service said 4,080 companies were liquidated between April and June, a little higher than the first quarter but down 19.1% on a year earlier.
This is add weight to claims that banks are still refusing to lend to firms in sufficient amounts.
Clare Stott, director of National Money Helpline, said: “We continue to see large numbers of consumers who remain over stretched financially, and we have yet to see the impact of the government’s public spending cuts, which we fear will only make the situation worse in the short to medium term. Our fear is that such cuts will bring greater job losses and fewer opportunities to earn overtime, which will further pressure family budgets.”
