Responding to the latest statistics from the Insolvency Service, which showed a sharp fall in bankruptcy orders in the third quarter of 2011, financial solutions company Think Money reminds borrowers that bankruptcy can still be an appropriate solution for people with completely unaffordable debts.
Figures for the third quarter of 2011 show that insolvencies dropped by 11 per cent overall, compared with the same period a year earlier, largely due to a 32.1 per cent fall in bankruptcy orders over that time.
Meanwhile, the number of IVAs (Individual Voluntary Arrangements) increased - up by 0.7 per cent on the third quarter of 2010, and up 7.5% on the previous quarter. Debt Relief Orders also continued their increase, up 7.6 per cent on the third quarter of 2010. Only in the final quarter of 2010 has the number of DROs ever fallen.
The figures could suggest that people are increasingly moving away from bankruptcy as a solution to serious debt problems, and looking into other solutions instead. But an expert at Think Money says that bankruptcy can still be the best solution for some people, despite its reputation as a 'last resort' for dealing with debt.
"While we urge struggling borrowers to consider all the options for tackling their debts, they certainly shouldn't write bankruptcy off as a possible solution. Bankruptcy continues to help thousands of people every year, and for some people's circumstances it can be more suitable than an IVA.
"For example, bankruptcy doesn't require regular monthly payments unless the borrower can afford it, which means even unemployed people could be eligible. In most cases, it's also over more quickly than an IVA. However, homeowners should note that bankruptcy normally involves selling their home to help repay their debts.
"All insolvency solutions affect the borrower's credit rating, but not getting the right help could have even more serious consequences in the long run.
"Of course, it normally takes a long time before a debt problem gets to the point where an insolvency solution is necessary - so the earlier people get help, the better. It's important that anyone with concerns about their debts contacts an expert adviser to discuss the best way of dealing with the problem."
Think Money is one of the UK's leading financial solutions providers, delivering a comprehensive range of financial solutions, including loan, insurance and banking solutions.
Think Money defines its mission as 'To educate, rehabilitate and advise on all aspects of financial management'.
For more information, visit the Think Money website at http://www.thinkmoney.com/debt/
Think Money bankruptcy section: http://www.thinkmoney.com/debt/bankruptcy-advice/
Think Money IVA section: http://www.thinkmoney.com/debt/IVA/
Think Money DRO section: http://www.thinkmoney.com/debt/debt-relief-order/