Bankruptcies and insolvencies in decline

”Bankruptcies

Figures published by the Insolvency Service have revealed bankruptcies and personal insolvencies fell in the third quarter but nevertheless remained above pre-credit crunch levels.

According to the Insolvency Service, there were 33,935 personal insolvencies in the July to September period - a fall of 3.7% compared with the same period a year earlier.

Meanwhile, there were 3,974 firms which went into liquidation - 13.9% lower compared with a year ago and a fall of 2.2% compared with the previous quarter.

Of the 33,935 personal insolvencies, the number of people declared bankrupt dropped to a five-year low of 13,907, however, this was attributed to the Debt Relief Orders (DRO).

A DRO, introduced in April 2009, allows individuals with debts of less than £15,000 and a low income, to write off their debts rather than being declared bankrupt.

In the meantime, corporate insolvencies fell for the sixth quarter in a row, with total company liquidations dropping to just below the 4,000 mark.

While the figures appear encouraging, experts have warned that the ongoing lack of credit, coupled with the Government’s massive spending cuts, could see problems ahead - particularly for smaller companies.

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