Bankruptcy 'still a valid solution'
In response to the latest Insolvency Service figures, financial solutions company Think Money says bankruptcy is still the best option for some people in debt, despite a sharp fall in take-up figures.
It says bankruptcy can be the most appropriate solution for people who really can't afford their debts.
The insolvency figures for the third quarter of this year show overall insolvencies dropped by 11% compared with the same quarter a year earlier, largely owing to a 32.1% drop in bankruptcy orders over that time.
The latest figures suggest that more people are opting for an IVA (Individual Voluntary Arrangements) than last year - IVA figures increased by 0.7% on the third quarter of 2010. Debt Relief Orders are increasing in number too - those figures are up by 7.6% on the third quarter of 2010. This trend appears likely to continue - DRO numbers only ever fell in the final quarter of 2010.
A spokesperson for Think Money commented: "Bankruptcy continues to help thousands of people every year, and for some people's circumstances it can be more suitable than an IVA.
"For example, bankruptcy doesn't require regular monthly payments unless the borrower can afford it, which means even unemployed people could be eligible. In most cases, it's also over more quickly than an IVA. However, homeowners should note that bankruptcy normally involves selling their home to help repay their debts."