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Bankruptcies at lowest level since 1990

The number of people going bankrupt across England and Wales has fallen to its lowest levels in a quarter of a century, official figures show.

Some 3,944 bankruptcy orders were recorded between April and June, marking the lowest figure recorded since winter 1990, the Insolvency Service said.

The latest bankruptcy figure also represented a 27.9% fall compared with the same period a year earlier.

Overall, the number of people being tipped into personal insolvency in the second quarter of 2015 was at its lowest levels since autumn 2005, with 18,866 cases recorded between April and June 2015.

There are three types of personal insolvency - bankruptcies, debt relief orders (DROs) which are often dubbed "bankruptcy light" and aimed at people with lower levels of debt but no realistic prospect of paying it off, and individual voluntary arrangements (IVAs), where money is shared out between creditors.

DROs, which were introduced in 2009, are likely to have affected the number of bankruptcies, the Insolvency Service said.

The figures also show that there were 5,832 DROs in the second quarter of 2015, which is 16.8% lower than the same period in 2014.

The number of IVAs being recorded plunged by more than one third compared with a year earlier. Some 9,090 IVAs were recorded in the second quarter, marking a 35.9% year-on-year fall.

The figures also showed that total company insolvencies across England and Wales were fell to their lowest levels since winter 2007, with 3,908 cases recorded.

The latest figure marks a 7.5% fall compared with the same period in 2014. The decrease was mainly driven by a fall in compulsory liquidations, the Insolvency Service said.

Matthew Chadwick, head of personal Insolvency (England and Wales) at BDO LLP, said: "Some insolvency practitioners are reporting an increase in activity since June. This may be because bankruptcy threshold levels will rise from £750 to £5,000 this autumn.

"Long term, this will mean only individuals with higher levels of debt will be made bankrupt, but short-term there may be a rush by creditors to make bankruptcy orders before the October cut-off."

A recent report from the Insolvency Service showed that the personal insolvency rate for women overtook that for men in 2014.

Across all age groups, the personal insolvency rate per 10,000 adults was 22.2 for women in 2014, whereas for men the rate was lower, at 21.2.

The low interest rate environment has helped to keep the cost of borrowing cheap, but Bank of England governor Mark Carney recently suggested that the base rate could start to rise from its historic 0.5% low around the turn of the year.

Mr Chadwick continued: "Interest rate rises are expected to be slow and careful. Most will not therefore find these a problem, but those with high levels of debt, or affected by unforeseen circumstances, may find themselves more likely to face insolvency than in recent years."

Mark Sands, personal insolvency partner at Baker Tilly said: " We are seeing a general downward trend in personal insolvencies as confidence in the country's financial health starts to return.

"However, the recent statement from the Bank of England about the imminent interest rate rise should act as a reminder that a lot of households are likely to struggle financially next year as interest rates rise."

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