The number of people going financially insolvent across England and Wales fell to the lowest level in more than a year in the first quarter of 2020.
Some 27,849 personal insolvencies were recorded between January and March – the lowest quarterly figure since 24,763 cases in the third quarter of 2018.
The latest total was down by 11% compared with the first quarter of 2019.
But the Insolvency Service, which released the figures, warned that, while they largely pre-date the impact of coronavirus, there may have been some impact where insolvency practitioners and courts were unable to process cases in the usual way towards the end of March.
Within the latest total, individual voluntary arrangements (IVAs) were the most common type of personal insolvency, accounting for 60% of cases, followed by debt relief orders (DROs), which made up 25%, and bankruptcies, which accounted for 15% of cases.
Personal insolvencies, 27,849
Company insolvencies, 3,883
IVAs are agreements whereby payments are shared out between creditors, and DROs are used by people who have a low income, low assets and less than £20,000 of debt.
Bankruptcies tend to be seen as a last resort. People can apply to make themselves bankrupt if they cannot pay their debts, or, if they owe someone more than £5,000, then the creditor can apply to the court to make the person who owes money bankrupt.
The Insolvency Service said the fall in personal insolvencies in the first quarter was driven by a decrease in IVAs – although this was partially offset by an increase in bankruptcies.
The number of DROs remained broadly unchanged.
Company insolvencies also decreased in the first quarter of 2020, when compared with the previous three months and the first quarter of 2019.
In the first three months of 2020 there were 3,883 company insolvencies.
This was down by 8.5% on the fourth quarter of 2019 and a 8.5% decrease on the same quarter in 2019.
Creditors’ voluntary liquidations, where company shareholders can pass a resolution that the company should be wound up voluntarily, were the most common type of company insolvency in the latest figures, accounting for more than two-thirds (70%) of cases.
This was followed by compulsory liquidations (18%), which happen when a winding-up order is obtained from the court by a creditor, shareholder or director.
The remaining 12% was made up of various other types of company insolvency.