Personal insolvencies fall 11% in 2011
Fewer people were declared insolvent in England and Wales in 2011 than in the previous year.
Last year 119,850 people were declared insolvent, according to the Insolvency Service, 11.3% less than in 2010 when personal insolvencies hit record highs.
This figure includes 41,845 bankruptcies, down 29.3% year-on-year, 49,056 individual voluntary arrangements (IVAs), down 3.2% from 2010 and 28,949 debt relief orders (DROs), up 15% on 2010.
Over the year as a whole, this amounts to one in 366 people became insolvent.
In the final three months of 2011, there was a 5.6% fall in personal insolvency compared to the same period in 2010.
"This is fantastic news as we continue to battle the debt bulge," says Steve Rees, managing director of debt consultant Vincent Bond & Co. "But it is important not to forget that insolvencies are still at a record high and have been for the last 10 years."
Nick Fisher, insolvency practitioner at chartered accounts HW Fisher & Co, says at first, the fall in personal insolvencies offers some "crumbs of comfort".
However, he comments that the "huge leap" in the number of DROs "hints at more trouble to come".
Generally speaking, insolvency is to businesses what bankruptcy is to individuals. A company is insolvent if the value of its assets is less than the amount of its liabilities, or it is unable to pay its liabilities (loan payments) as they fall due. It’s an offence for an insolvent company to keep trading, so the main options available to an insolvent company are: voluntary liquidation, compulsory liquidation, administration or a company voluntary arrangement.