Bankruptcies fall 21pc but overstretched borrowers find other ways to go bust

PERSONAL bankruptcies fell to pre-recession levels in the second quarter, but the headline drop masked a rush by troubled consumers for alternative ways to resolve their woes.

Despite a 21 per cent year-on-year decline in bankruptcies, 380 people entered into insolvency every day during the three months, according to accountancy firm RSM Tenon.

Debt relief orders (DROs) and individual voluntary agreements (IVAs) were among the procedures used by individuals to avoid going bankrupt, with the number of people opting for them up 11 per cent and 16 per cent respectively quarter-on-quarter.

The figures come ahead of official statistics on bankruptcies due to be released tomorrow.

Mark Sands of RSM Tenon said: “The huge drop in bankruptcies has been countered by increases in other insolvency options, making this reduction a red herring. While we welcome the fall in the numbers of people turning to bankruptcy… there is little change to the overall number of people struggling with their finances.”