Latest Government Insolvency Statistics – Analysis

The Insolvency Service has recently released its latest quarterly insolvency statistics. Let’s take a look at the headline figures.

During the first quarter of 2011, insolvency levels in England and Wales continued to fall, coming down from the all-time high we experienced at the start of 2010.

Between January and March 2011, 30,162 people were declared insolvent, compared with 30,685 during the previous quarter and 35,682 a year earlier. That’s a yearly drop of 15.5%.

Bankruptcies recorded an increase on the previous quarter – rising from 12,028 to 12,539. Even so, the Q1 figure was still 31.3% lower than the level we saw at the start of 2010 (18,256).

Individual Voluntary Arrangements (IVAs) were down 1,650 to 10,835 compared with the previous quarter and down 947 on Q1 last year.

Debt Relief Orders (DROs) saw a small increase – reaching 6,788 following their fall to 6,172 in the final quarter of last year.

So what does it mean?

While it’s good to see the figures falling, it’s important to remember that they only show the number of struggling borrowers who have actually entered into formal insolvency procedures.

They don’t give us any information on how many people are clearing their debts by other means – through informal debt solutions like debt management, for example. Nor do they give us an indication of how many people aren’t seeking any help with their unmanageable debts.

How might other people be repaying their debts?

There are other ways people tackle their debts; debt management, as mentioned, is one of these solutions that, here at Personal Debt Helpline we offer.

A debt management plan is an informal agreement between a borrower and their unsecured creditors in which they will repay their debts over a longer period of time. This solution is only right for people who can’t afford to repay their debts as originally agreed, but could repay them within a reasonable period of time (under different terms).

As with formal insolvency procedures, though, there are several things people will need to bear in mind if they’re considering an informal debt management plan. For example:

Re-scheduling how they repay their debts by entering a debt management plan means the debtor is defaulting on their original agreements. This will be recorded on their credit report, and can affect their ability to obtain credit for six years.

A debt management plan is an informal agreement, and creditors don’t have to to agree it – or to stick with it until the borrower has repaid everything they owe (although they’re likely to do so if they can see it is the best way for the borrower to repay the money they owe).

Repaying any debt more slowly can add to the overall cost, since it’ll have more time to accrue interest (although lenders will normally freeze interest during a debt management plan).

Contact us today for professional advice or see our website for more information on our debt solutions www.personaldebthelpline.co.uk

Source for statistics: http://www.insolvency.gov.uk