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Figures show rise in bankruptcies
Personal insolvencies declined by 1.2% in the first three months of this year compared with the previous quarter, the Insolvency Service said.
There were 28,723 personal insolvencies in England and Wales in the first quarter of 2012, which was also a 4.7% drop on the same period a year ago.
But within these figures, the year-long decline in the number of people being declared bankrupt came to an end, as bankruptcies rose by 5.5% on the previous quarter to reach 9,132, despite remaining 27.2% lower than this time last year.
The number of debt relief orders (DROs), another form of personal insolvency often dubbed "bankruptcy light", rose by 7.3% on the quarter to reach a record high of 7,897.
The overall decrease in the personal insolvency figures was caused by a sharp decline in individual voluntary arrangements (IVAs), which dropped by 10.4% on the quarter to reach 11,694.
The number of companies insolvent in England and Wales in the first three months of the year rose by 10% on the previous quarter. Some 1,290 firms had receivers or administrators appointed, compared with 1,173 in the final three months of last year.
Ian Gould, head of corporate recovery and insolvency at PKF accountants, said: "The statistics don't currently reflect the difficulties facing the corporate sector and I'd expect to see a significant increase in business failures at some point during the next 12 months or so."
The Insolvency Service suggested that the rise in DROs and bankruptcies could have been caused by a recent change in the law which makes it possible for money built up in a pension to be accessed to pay off bankruptcy debts.
Louise Brittain, a partner in Deloitte's contentious insolvency team, said the figures did not reflect the "crippling financial difficulty" being felt by households. She said small business-owners were likely to have formed a significant part of the bankruptcy increases, as they will have had greater difficulty trying to obtain credit in the tough economic environment.
Debt charity the Consumer Credit Counselling Service (CCCS) said it expects to see personal insolvencies rise over the next year and warned that six million households are still living on the edge. Delroy Corinaldi of the CCCS, said: "It is crucial that anyone who is struggling to repay their debts, or even worried about their debts, should seek free advice and support."