Personal bankruptcies have fallen to their lowest level for five years.
Official figures released by the Insolvency Service show that the number of people going bust in the first three months of the year fell to 6,663.
That’s a drop of 27 per cent compared to the same period 12 months ago.
Meanwhile personal insolvencies – which include debt relief orders and individual voluntary arrangements -dropped to their lowest level in five year.
There were 25,006 across England and Wales between January and March 2013, 12.9 per cent less than in the first three months of 2012.
But debt charities warned that the figures mask the real financial difficulties hitting millions of hard-up householders.
Delroy Corinaldi of Step Change said: “The declining levels of personal insolvency suggest that large debt levels may be declining. However, we know that the pattern of debt is beginning to change, as households are increasingly falling behind on priority living costs such as council tax, energy bills and rent.”
Joanna of the Money Advice Trust, warned that many people couldn’t actually afford to go bankrupt. “Getting the £700 - £525 for the deposit plus £175 for the court fee - together to petition for bankruptcy is not easy for people already struggling with debts. The result is that people are often left to drift in a financial black hole where they can’t afford to repay their debts, can’t afford bankruptcy, and have no other way out.”
Her view was backed up by Charles Turner of the Insolvency Practitioners Association. “Bankruptcies are an expensive bureaucratic process which provide poor returns for creditors and so are less favoured as a solution.”
He said he has seen evidence that debt management plans, which are not included in the figures because they are an informal process, have “grown significantly”, because they are seen as more cost-effective.
Meanwhile company failures also fell to their lowest level in five years, despite high profile flops such as HMV, Jessops and Republic.
Liquidations in England and Wales fell 15.8 per cent over the year to 3,619 in the first quarter. That was 5.3 per cent lower than the last three months of 2012.
But Stewart Baird of Stone Ventures, said: “There is something artificial about the current liquidation rate and I suspect we may see corporate insolvencies start to rise again at some point.”