The number of people declared bankrupt in England and Wales plummeted by 27% in the first quarter of 2013 compared to the same period last year, falling from 9,132 to 6,663, according to latest figures from the Insolvency Service.
On a seasonally-adjusted basis, the bankruptcy figures for the three months to the end of March are the lowest recorded in the UK since the first quarter of 2003. But a leading debt charity warned that the figures mask the fact that households are struggling to afford living costs such as council tax, energy bills and rent.
The bankruptcies figures helped take the total number of individual insolvencies – which includes individual voluntary arrangements (IVAs) and debt relief orders (DROs) as well as bankruptcies – to 25,006 in the first quarter, compared to 28,723 in the first quarter of 2012.
While individual insolvencies in the UK rose steeply in the seven years to 2010 (from around 35,000 in 2003 to a peak of just over 135,000 three years ago), they have been falling ever since as companies relax their repayment rules instead of aggressively pursuing debts.
Debt levels declining
But StepChange Debt Charity director of external affairs Delroy Corinaldi said: "While the decline in the numbers of personal insolvencies is welcome, the figures still remain well above the long-term average, as we continue to see the impact of the past credit boom working its way through the system.
"Large debt levels may be declining, however we know that the pattern of debt is beginning to change, as households are increasingly falling behind on priority living costs such as council tax, energy bills and rent."
According to Citizens Advice, you might want to think about bankruptcy if you have no money to pay your debts, or have so little that it will take you years to repay them.
Tips for sorting out your debts
- Sort out how much money you owe
- Work out if you've got any money to pay your debts off and, if so, how much
- Work out which are the most urgent debts for you to pay off. Priority debts (which have more serious repercussions if they are not paid) include: mortgage or rent arrears; gas and electricity bills; council tax arrears; court fines; arrears in maintenance payments (ie, support to an ex-partner or children); income tax/VAT arrears; and TV licence arrears.
- Look at your options for dealing with the less urgent debts and work out how to pay them off
- Contact your creditors and make arrangements to pay back what you owe
- Get help but don’t pay a fee for debt advice – try a charity such as Citizens Advice or Stepchange Debt Charity.