Fewer people declared bankrupt in 2011
The number of people declared insolvent in 2011 in England and Wales declined to 119,850, the lowest level for three years and a fall of 11.3 per cent from a record high in 2010.
There was a sharp decline at the end of 2011, when personal insolvencies fell by 5.6% compared with the last three months of 2010, according to the latest Insolvency Service figures.
The figures include bankruptcies, Individual Voluntary Arrangements (IVA) and Debt Relief Orders (DRO).
Despite the decline, personal insolvencies are still much higher than the average for the past 25 years.
One in 366 people became insolvent in 2011, compared with the 25-year average of one in every 1,600.
Although the figures seem to be on a downward trend, experts warn that the data does not include ‘zombie’ debtors, so the real level of personal debt could be much higher.
Zombie debtors are individual who have entered into informal arrangements with lenders.
While the number of personal bankruptcies fell by 28.3 per cent in the final quarter of 2011 compared with the same period in 2010, the number of IVAs rose by 4.5 per cent and the number of DROs increased by 18.3 per cent.
DROs can only be taken out by people with debts of less than £15,000, and there is the possibility that these individuals could become bankrupt at a later date.
The latest figures from the Bank of England show that consumers made an effort to reduce their debt in the run up to Christmas.
Consumer credit, excluding mortgages, fell by £377m to £207bn in December 2011, representing the biggest monthly drop since records began in 1993.
There was a £400m reduction in overdrafts and personal loans, while credit card lending remained the same.