The data released by the Insolvency Service showed that the numbers of adults in England Wales falling into insolvency fell by a surprisingly high 10.2%.
So far in 2012, the economy has struggled to show sign of recovery and the double dip recession has bitten far harder than many experts predicted. However, despite the financial woes up and down the country, fewer people are becoming insolvent, according to the latest figures.
The Office for National Statistics confirmed that during the second quarter of 2012, the British economy contracted by a further 0.7%. But during the same period, just 27,390 cases of personal insolvency were recorded, a drop compared to the same time in 2011.
The figures included 8,088 cases of bankruptcy, a drop of 27.1% and 11,346 IVAs, a fall of 6.6% on 2011. Debt relief orders were higher, however, up by 9.6%, reaching 7,956.
But not everyone agreed that the figures represented an improvement in the finances of households across the UK.
The head of the Money Advice Trust, Joanna Elson, said that many people had been left in a ‘financial black hole’ because they simply cannot afford the £700 fees associated with a declaration of bankruptcy, despite it being the best solution. She added that debt relief orders were increasing because they were relatively cheap, compared to other options.
Top accountancy firm, Baker Tilly, echoed the views of Ms Elson. The head of personal insolvency at the group, Alec Pilmoor, said that the decreasing figures disguised the real state of finances in the UK. He warned that real income was currently at its lowest levels in seven years and said that many individuals were fearing for their job security.