Personal insolvencies 'at lowest level since 2005'

Updated

Personal insolvencies fell to their lowest levels in a decade in 2015 across England and Wales, official figures show.

A total of 79,965 personal insolvencies were recorded last year, marking the lowest annual total since 2005, when 67,584 cases were recorded, according to Insolvency Service data.

Personal insolvencies in 2015 were also down by nearly one fifth (19%) compared with 2014.

The official personal insolvency figures are made up of three types of insolvency. These are bankruptcies, which tend to be seen as a last resort; debt relief orders (DROs), which are often dubbed "bankruptcy light" and are aimed at people with smaller amounts of debt but no realistic prospect of paying it off; and individual voluntary arrangements (IVAs), which are agreements where money is shared out between creditors.

The Insolvency Service said there were 15,797 bankruptcy orders last year. The number of bankruptcies has been on a downward trend each year since 2009, and the bankruptcies were at their lowest annual levels since 1990 last year.

Rock-bottom interest rates have been helping to keep the cost of people's borrowing down, although there has been speculation that rates could start to increase in 2016 as the economy recovers.

DROs are often seen as an alternative to bankruptcies. Changes made to DROs in October mean that people with up to £20,000 worth of debt now have a DRO as an option. The previous debt limit for people entering a DRO was £15,000.

Overall, the number of DROs recorded last year was the lowest since they were introduced in 2009, with 24,175 cases recorded.

But the Insolvency Service said there was a slight upswing in DRO cases in the last three months of 2015, which it put down to the changed criteria which allowed more people to use them as an option.

There were 39,993 IVAs during 2015, marking five years in a row of decreasing numbers and the lowest annual total since 2005.

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