Fewer going bust

Fewer people are going bust and the least nasty form of insolvency, the Individual Voluntary Arrangement or IVA, is now falling along with bankruptcies and Debt Relief Orders.

There were 10,405 IVAs in England and Wales in the first three months of the year, down 24% from the same time last year. This is the route where you make a formal agreement with creditors to pay back an amount you can afford.

Mark Sands from the insolvency firm, Baker Tilly, tells me this is basically as a good as it sounds, a sign that those in the most acute financial trouble after the credit crunch and the recession are working through the system.

Through this period, they avoided "giving up on their debts" through a bankruptcy or DRO -- if they could -- by opting instead for the optimistic route of an IVA and pledging to try to pay money back.

But now fewer are needing to walk down the IVA road either, helped by the recovery and continued forbearance from some lenders.

What next? There are still many more people who go bust than in the dim, distant past before the credit boom of the early years of this century.

And that probably won't change, because we have grown addicted to being able to borrow money when we feel like it.

In fact we could now be close to a low point.

Mark points out that unsecured lending - where you don't have to pledge your home or other assets - is on the rise once again.

Plus interest rates will rise at some stage, even if some forecasters now suggest that stage may not be reached until next year.

So now may be the time to start looking at how we can prevent the number of personal insolvencies starting to bounce back again.