Cold weather could be cause of drop in bankruptcies

The sharp drop in bankruptcies seen in December could be partly a result of the cold weather conditions at the time, experts have suggested.

The latest figures from the Insolvency Service showed that bankruptcy orders fell significantly in December, down by 29.2% compared with the same quarter a year earlier. This contributed to a 13.6% overall drop in insolvencies in that time.

Debt Relief Orders increased by 15.4% year-on-year, but were down on the previous quarter for the first time since they were introduced in April 2009. IVAs fell by 5.4% compared with a year earlier.

According to the BBC, experts believe that the cold weather prevented many people from attending court for bankruptcy proceedings that month. A sympathetic attitude from lenders, as well as borrowers themselves putting off insolvency until the new year, may have also brought the numbers down.

An expert at debt management company Gregory Pennington said: "A fall in insolvencies is good news, but the general consensus now seems to be that a lot of cases have simply been delayed rather than avoided entirely. This suggests we could see another rise in insolvencies this quarter.

"Early action can often help struggling borrowers to avoid insolvency, so it`s essential that people seek expert advice as soon as they realise there`s a problem."