Online news: Personal insolvencies drop 11% 4 November 2011

The number of personal insolvencies fell 11% in three months to the end of September, compared to the same period last year, according to figures released today.

The figures from the Insolvency Service show that personal insolvencies were down to 30,219 in the third quarter of 2011.

This was made up of 9,567 bankruptcies – down 31.2% on the same quarter last year, 13,048 Individual Voluntary Arrangements (IVAs) – up 0.7% on the corresponding quarter of the previous year and 7,604 Debt Relief Orders (DROs) – up 7.6% on the same period last year. The DRO figures represent the highest quarterly total since their introduction.

In April 2011 a change was introduced to Debt Relief Order legislation to allow those who have built up value in a pension scheme to apply for debt relief under these provisions. The Insolvency Service says this will have increased the overall numbers of those eligible to apply for a Debt Relief Order, and is also expected to have had some impact on the numbers of bankruptcy orders.

Bev Budsworth, managing director of The Debt Advisor, said: “Levels of personal insolvencies are not as high as last year but we are still seeing over 330 people a day being declared insolvent or bankrupt.”

Budsworth said the real change is the demographics of the people that are finding themselves with levels of serious debt – with a strong increase in the ‘impoverished middle classes’ seeking help.

She added: “The days are long gone when it was the lower social classes who ran up debts, nowadays all people from all walks of life are suffering. More and more ‘well to do’ people are breaking the debt stereotype by not being able to keep paying off their debts, which historically, wasn’t an issue.

“Ten years ago, these people were still spending but unemployment, record inflation, negative equity and a whole host of other weak economic factors has meant that their ability to service this high spending lifestyle has been severely diminished.”