Five questions on: Personal insolvencies

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Are more people going bust?

Quite the opposite. The latest quarterly insolvency figures showed that fewer people went bankrupt between April and June than in any three-month period for 25 years. The Insolvency Service said 3,944 bankruptcy orders were recorded between April and June, the lowest figure since winter 1990

Really? Isn't that great news?

Up to a point. In fact fewer people are going bankrupt because struggling people are choosing other options.

What other options are there?

For starters there's the less severe debt-relief order – often known as bankruptcy lite – which was introduced in 2009. These orders have proved hugely popular as they're less expensive and less onerous, and are aimed at people with lower levels of debt but still no realistic prospect of paying it off. Then there are individual voluntary arrangements, where an agreement is set up between a debtor and their creditors to freeze all debts and often negotiate lower payments. They're attractive to creditors on the basis that some money back is better than nothing, while for borrowers they're a way to cut the amount they owe in a stroke.

Taking those options into account, are more people going bust then?

No. Even including debt-relief orders and individual voluntary arrangements, the number of people going bust has reached its lowest level for a decade, with 18,866 cases in the three-month period.

Is that because we're out of recession and back to boom-boom times?

Far from it. The lower number of people going bust is actually a reflection of the six years of record low interest rates we've experienced. Lower interest on loans has meant lower repayments, with fewer folk going bust because they've been unable to cope with unaffordable debt. However, that is set to change if rates start climbing later this year, experts warn. In other words, a rate rise could lead to more people going bust than ever.