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Insolvencies fall to lowest level in 10 years


The numbers of insolvencies in England and Wales have fallen to their lowest rate in almost a decade.

Figures from the Insolvency Service have shown that 20,826 people became insolvent in the first three months of the year, which is the lowest figure since autumn 2005. It works out as a fall of 18.6% compared to the first three months of 2014, which is one of the steepest declines on record.

The number of companies becoming insolvent also fell. In the first three months of 2015, 4,052 companies went bust, a drop of 11.3% on the same quarter last year and the lowest figure since the autumn of 2007.

Insolvencies include bankruptcies, debt relief orders and individual voluntary arrangements (IVAs). IVA’s, which is the most common form of insolvency, fell by 23.5%.

The reason for the fall is linked to the lack of consumer borrowing following the 2008 financial crisis. Seven years later, fewer people are in financial difficulty as fewer loans and credit cards were sold.

Peter Tutton, head of policy at StepChange said:
"With levels of personal borrowing growing rapidly once again, the next government and lenders must ensure that the mistakes of the pre-crisis credit boom are not repeated.
"Our concern is that growing levels of consumer credit will be followed by growing numbers of people falling into problem debt."

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