Fewer people facing bankruptcy

Recent figures showed that individual insolvencies have risen

The number of people facing bankruptcy has fallen compared with a year ago, says the Ministry of Justice.

One type of bankruptcy petition filed with the courts in England and Wales fell by 15% from the first quarter of 2007 to the same three months of 2008.

But the figures, which give an indication of the levels of debt, have risen compared with the final three months of last year.

In total, 17,931 petitions were issued from January to the start of April.

Choosing bankruptcy

The number of individuals choosing bankruptcy - called debtors' petitions - stood at 13,080 in the first quarter of 2008, the figures show.

This was up from 11,674 in the previous three months, but a decrease of 13% on the number of petitions in the same quarter of 2007.

Some 4,851 people were facing forced bankruptcy - creditors' petitions - in the first three months of 2008, up slightly on the 4,583 of the previous quarter but down 15% on the same time a year ago.

These figures illustrate the start of the bankruptcy process.

Reflecting problems

Mike Gerrard, a personal insolvency partner at Grant Thornton, said that the quarter-on-quarter rise was a "true reflection" of a increasingly sizeable minority of people getting into problems with debt.

This [the quarter-on-quarter rise] shows a trend that cannot be ignored Mike Gerrard, Grant Thornton

He predicted the numbers would rise throughout 2008 as household food and energy bills went up and people could not use equity in their homes.

"This shows a trend that cannot be ignored," he said.

The latest figures come shortly after the Insolvency Service revealed the number of individuals actually declared insolvent in England and Wales was up slightly in the first three months of 2008.

Its statistics include people going bankrupt and those taking out individual voluntary arrangements (IVAs) - an alternative to bankruptcy that allows debtors to come to an agreement with their creditors.

The number of individual insolvencies stood at 25,264, up by 1.7% compared with the previous three months, but still 13.2% fewer than over the same period a year ago.

Business picture

The Ministry of Justice said that 2,965 companies were facing being wound up in the first quarter of 2008.

Bankruptcy petitions are the first stage of the legal process

Similar to the picture for individuals, this was a slight rise on the 2,888 figure for the previous three months, but down 10% on the same three months a year ago.

Again, this is in contrast to the trend for companies moving towards the end of the process.

The Insolvency Service said the number of companies going into administration rose sharply in the first three months of the year.

The number of administrations stood at 858 over this period, some 54% higher than the 557 of the previous three months.

Many failing companies first go into administration or receivership and then those parts of the business which cannot be rescued are put into liquidation.

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