According to figures from The Insolvency Service, published last week, the number of personal insolvencies has declined by over 10 per cent in the second quarter of 2012, with experts believing that this is due to the increase in the fees required to go bankrupt.
And this may be borne out by an increase in the number of Debt Relief Orders (DROs), designed for those with debts of under £15,000 and assets and savings of less than £300, which were up almost 10 per cent on the corresponding quarter of 2011.
Bankruptcy numbers have been impacted by the introduction of DROs from April 2009, amongst other factors. The numbers of DROs are now comparable to total bankruptcies for the first time, while Bankruptcy Orders have been lower than Individual Voluntary Arrangements (IVAs) for the last five quarters.
Delroy Corinaldi, from the Consumer Credit Counselling Service, said: “Insolvency is a very difficult thing to have to face and it is usually at the end of a long struggle of trying to deal with debt.
“The fact that almost 30,000 people had to do this during April, May and June this year is staggering and highlights just how many households need help with their debt problems.
“It underlines why those who do find themselves in this situation need to be able to access free, independent and expert advice as soon as they begin to struggle with their debt.”
While Joanna Elson, chief executive of the Money Advice Trust, said: ““People struggling with debt often simply can’t afford the £700 it costs to go bankrupt (£525 for the deposit plus £175 for the court fee), even though that would otherwise be their best option. This leaves them in a financial black hole.”
Tim Close is an accountant specialising in business insolvency, debt recovery and business rescue.