Personal insolvencies have dropped to their lowest level in five years despite the tough economy, official figures show.
There were 25,006 individual insolvencies across England and Wales in the first three months of 2013, marking the lowest figure recorded since the first quarter of 2008, according to Insolvency Service statistics. This marked a 1.8% drop on the previous quarter and a 12.9% fall compared with the same period a year ago.
Within the figure, bankruptcies hit their lowest level since winter 2002. Bankruptcy orders plummeted by 27% year-on-year, with 6,663 in the first quarter of this year. Bankruptcies have generally been falling back since the introduction of debt relief orders (DROs) in 2009.
DROs are are often dubbed "bankruptcy light" and are aimed at people with lower levels of debt but no realistic prospect of paying it off. They have been running at higher numbers than bankruptcy orders since last summer.
The figures showed there were 7,219 DROs in the first quarter of this year, marking a small drop on the previous quarter and a 9% fall compared with a year ago.
Individual voluntary arrangements (IVAs), which are agreements which involve sharing money out between creditors, were the only type of personal insolvency to see an increase on the previous three months. Some 11,124 IVAs have been recorded this year so far, which is a 1.3% rise on the quarter but still 5% lower than a year ago.
The figures show signs of further improvements in people's ability to manage their finances, after last year's figures showed that personal insolvencies dropped to their lowest annual levels since 2008. Continued low interest rates have helped to ease some borrowers' costs and unemployment has not risen to the levels some had feared.
However, the official figures do not show the full extent of people struggling with debt. Analysts have warned that many people are still trying to "muddle through" the tough economy and they remain under pressure from soaring rents, high energy bills and a tough jobs market.
Welfare reforms will also mean more low-income families will have very tight budgets to balance this year, experts have warned.
Charles Turner, president of the Insolvency Practitioners Association (IPA), said: "The figures released this morning do not in my opinion reflect the reality of life for a great number of consumers who are undoubtedly struggling as wage growth flat-lines and their household costs continue to increase... The harsh reality is that many people are still struggling on, trying to make ends meet."