Bankruptcies fall to 2005 levels

The Insolvency Service has released insolvency figures in the UK for the second quarter of 2011.

In the second quarter of this year, 83% of people who went bankrupt did so by petitioning for bankruptcy themselves. This is fairly consistent with what we've seen in recent quarters. What this means is that just over 8 out of 10 people entering bankruptcy are deciding to go bankrupt themselves, instead of being forced to by a lender.

A lender can petition for your bankruptcy for a debt as small as £750. Insolvency trade body R3 recently commented that this sum should be raised to £3,000, as the £750 figure dates back to 1986 and is "outdated".

The Government seems to be in agreement and recently stated: "To be able to threaten someone with bankruptcy for such a small amount is disproportionate."

The latest insolvency figures also reveal that in the second quarter of this year, personal bankruptcies in England and Wales were down 25.8% on the same period last year, falling to 11,113. The last time there were fewer bankruptcies in a quarter was at the start of 2005.

However, as personal bankruptcies continue to decline, the number of Debt Relief Orders is on the rise. DROs were up by 15.3% on the second quarter of 2010.

DROs are another form of insolvency for those with no or low-value assets. In the time since DROs were introduced, the number of personal bankruptcies per quarter has fallen by over 9,000 - but the most recent figures show that 7,257 people entered a DRO in the second quarter of this year.