Rates of personal insolvency in England and Wales have continued on a downward trend in recent months and reached their lowest level in a decade during the first quarter of 2015.

Data released recently by the Insolvency Service revealed a decline in both bankruptcies and Individual Voluntary Arrangements (IVAs), as well as debt relief orders during the period.

The figures follow similar patterns as those being seen north of the border in Scotland too, where the Accountant in Bankruptcy revealed in April that personal insolvency rates fell by 19.1 per cent in the 12 months prior to the end of March 2015.

However, while the news of insolvency rates falling is certainly good news on the face of it for consumers throughout the UK, there are still thousands of people struggling to turn around dire debt management situations right around the British Isles.

Even while confidence appears to be returning in the UK economy as a whole and among consumers within it, experts who deal with heavily indebted borrowers regularly remain keen to emphasise the importance of responsible financial management.

Debt (PD)Consumers in England, Wales and Scotland are increasing the scale of their debts and while that is not currently translating into increases in insolvency cases, there are concerns in some quarters that it might in months and years to come.

"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," said Peter Tutton, from the debt charity StepChange, in response to the latest figures.

"Our concern is that growing levels of consumer credit will be followed by growing numbers of people falling into problem debt,” he said.

Nonetheless, for now at least, UK consumers look to be coping more effectively with the pressures of managing their debts. Indeed, the numbers from the Insolvency Service are striking, with a 23.5 per cent year on year reduction reported in IVAs, the most popular form of insolvency in England in Wales.

Overall, there were 10,405 individuals entering an IVA in the first three months of 2015 throughout England and Wales, along with 4,209 people entering bankruptcy and 6,213 recipients of debt relief orders. Rates of individual insolvency in the two countries have declined in every quarter since 2010.

Meanwhile, in Scotland, there were 2,569 people who entered some form of insolvency during the first three months of 2015, which is the lowest figures recorded for a single quarter since 2005.

Politicians in Scotland were quick to welcome the findings as evidence of the growing strength of the Scottish economy.

"These are extremely encouraging numbers which illustrate that Scotland’s recovery continues to gather pace,” said Scotland’s business minister Fergus Ewing.

This government remains committed to doing all it can to ensure fewer and fewer people experience the misery associated with problem debt,” he said.

Of course, for anyone who finds themselves in the position of coping with serious debt management difficulties, it will come as scant consolation to know that national rates of insolvency are and have been falling in recent years.

What’s important is that anyone struggling with problem debt can find the guidance and support such as Debt Arrangement Schemes they need to make appropriate assessments and choose the most prudent path towards becoming debt free.

By John Baird

John is a personal finance and insolvency expert from Scotland Debt Solutions. He specialises in advising people on how to manage their money and deal with their personal debt problems.

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