Insolvency Service data out today show that company liquidations in England and Wales in the first quarter of this year were up 4.8% on the previous quarter and up 4.9% on the same quarter in 2013.
Similarly, personal insolvencies increased in the first quarter to 24,931 but were still lower than the same period 12 months ago.
Bev Budsworth, managing director of The Debt Advisor, said: “Today’s figures show that overall personal insolvencies have increased but are still less than they were 12 months ago and have still seen a reduction of about a quarter from around 135,000 in 2010.
“Corporate insolvency is also slightly higher in this quarter, however, the Insolvency Service puts this down to an unusually low number of compulsory liquidations in the last quarter and has said that figures have been ‘fairly stable’ since 2012.
“Following the introduction of the ‘bankruptcy lite’ solution in 2009 – the Debt Relief Order (DRO), the numbers of DROs and bankruptcies collectively increased to a worrying high of 85,000 in 2010. Since then the numbers of bankruptcies and DROs combined have steadily declined to just over 52,000 in 2013, primarily driven by the reduction of bankruptcy numbers. This quarter has also seen a decline in DRO numbers from just over 7,200 at the start of 2013 to 6,459 today.”
She added: “There is no doubt that the decline in bankruptcies is due largely to the high cost of making oneself bankrupt – a fee of £700 which could take debtors many months to save up. Even though there are numerous licensed intermediaries to help with drafting petitions for both DROs and bankruptcies, the process is still complex and daunting and therefore many debtors opt for procedures which are easier to access and set up.
“It’s not surprising that Individual Voluntary Arrangements (IVAs) are up slightly as these are by far the most sought after option for people in serious debt. IVAs have been around for years and have consistently been proven to work well for both individuals in debt and their creditors. Figures over the last three years have shown that IVAs have remained steady at around 49,000 per year.”
