The number of people going financially insolvent after being unable to pay their debts across England and Wales fell by 5% in the first three months of this year.
Some 29,140 personal insolvencies were recorded between January and March, the Insolvency Service said.
It said the number of insolvencies was 5% lower than in the fourth quarter of 2020, with numbers of individual voluntary arrangements (IVAs), debt relief orders (DROs) and bankruptcies all lower.
IVAs, which are agreements whereby money is shared out between creditors, accounted for more than three quarters (77%) of personal insolvencies in the latest quarterly figures.
In the first quarter of 2020, 28,936 personal insolvencies were recorded, so the latest total is 1% higher than a year ago.
While some have managed to save during the pandemic, others have had to borrow in order to survive and, as a result, will be more vulnerable to the financial problems caused by unexpected issues like redundancy or reduced hours at workColin Haig, R3
The service said the number of bankruptcies and DROs have remained low since the start of the first UK lockdown in March 2020, when compared with pre-coronavirus pandemic levels.
Its report said: “This is likely to be partly driven by Government measures put in place in response to the coronavirus (Covid-19) pandemic, including enhanced Government financial support for companies and individuals.
“As the Insolvency Service does not record whether an insolvency is directly related to the coronavirus pandemic, it is not possible to state its direct effect on insolvency volumes.”
Colin Haig, president of insolvency and restructuring trade body R3, said: “Government programmes like the furlough scheme, and payment holidays on loans, mortgages and credit cards, have helped many people affected by the pandemic avoid insolvency.”
But he said some private sector support schemes have finished and the furlough scheme will also eventually end – and not everyone has been able to benefit from support.
He continued: “While some have managed to save during the pandemic, others have had to borrow in order to survive and, as a result, will be more vulnerable to the financial problems caused by unexpected issues like redundancy or reduced hours at work.
“The introduction of the breathing space scheme in May will give people who are in debt the opportunity to talk to an adviser about their options for resolving their financial difficulties without any pressure from their creditors.
“This is welcome and could provide people who are struggling with the time and space to resolve their financial difficulties, but we would urge anyone who is worried about their finances to seek advice – and to do it now.
“Talking about money worries is hard, but discussing your concerns with a professional will give you more time and more options to resolve your situation than if you’d waited.”
The service also said that during the first quarter of 2021, there were 2,384 registered company insolvencies across England and Wales.
The number of company insolvencies was 22% lower than in the fourth quarter of 2020 and 38% lower than in the first quarter of 2020. This was driven by a fall in all company insolvency procedures, the report said.