Experts have predicted that the rate of personal insolvencies will plummet to the lowest rate seen since 2005.
Despite the UK falling into a double dip recession, specialist accountancy firm, RSM Tenon, have said that they expect to see the fortunes of individuals to improve in the coming year.
RSM Tenon has estimated that around 100,000 will become insolvent, the smallest number seen since before the credit crunch when, in 2005, just 67,000 people went bust.
In the first quarter of 2012, 28,000 individuals entered into an insolvency, a 2% drop compared to the final three months of 2011 and 9% less than the same period last year. Bankruptcies were up in the last three months compared to the previous quarter, but experts have dismissed this as a normal seasonal blip due to the overspending during the festive period.
Of the 28,000 who become insolvent in the first quarter of 2012, 9,000 entered into bankruptcy, whilst 11,000 Individual Voluntary Arrangements and 8,000 Debt Relief Orders (DROs) were issued. DROs are a relatively new phenomenon and can only be obtained when the total amount owing is less than £15,000.
The vast bulk of the insolvencies were from individuals aged between 26 and 55 – 77% – whilst the younger generation, those aged between 18 and 25, suffered a comparative deterioration in their fortunes, with a 12% increase in personal insolvency, compared to the previous quarter.
The head of personal insolvency at RSM Tenon, Mark Sands, said the figures revealed that the recession had not pushed up the number of cases as some had feared. However, he was keen to stress that this is not because households across the country have plenty of money, but because many are getting better at managing on a budget.