Insolvency figures fell for second quarter

Many industry officials have been surprised to learn that the second quarter of this year saw insolvency levels in the UK fall. In the first quarter of this year insolvency levels rose compared to last year, which was the first rise in a number of years. This is a trend that many industry officials had expected to continue given the difficult financial conditions faced by many.

However, for the second quarter insolvency levels have dropped by 2% compared to the first quarter, with both IVA (Individual Voluntary Arrangement) levels and bankruptcy levels falling. The drop also put insolvency figures at 8.3% lower than the same period last year, with a total of 24,553 insolvencies.

Some officials have said that the drop in figures is down to people being more cautious with their spending due to the global credit crunch. However, one official said: ‘I’m not sure the credit crunch is the sole factor in the decrease, but it is definitely affecting people’s decisions on how they should handle their debt.’

He added: ‘It is impossible to pinpoint one particular reason from these figures, but economic conditions and available credit are factors.’

Another official said that although figures had gone down it was ‘important to bear in mind that this is from historically very high levels. The rates are still significantly higher than during the previous five years and I would expect this general upward trend in personal insolvencies to continue in the short to medium term.’