Insolvency Service figures for the second quarter of 2012 showed the number of insolvencies was 10.2 per cent lower than in the same period of 2011.
The last year has seen each quarter's tally of insolvencies fall compared to the previous three months, while another feature has been that the number of IVAs was higher than bankruptcies.
In the latest instance, the second quarter produced 8,088 bankruptcy orders, compared with 11,346 IVAs.
People who are struggling very badly with their finances and owe £15,000 or more may feel they have no way out of their current difficulties. If this is the case, the best move can be to seek advice on whether taking out an IVA is the right option.
Unlike bankruptcy, an IVA does not wipe out all debt. Instead, consumers will make reduced payments agreed with creditors in a deal that is binding on all of them provided at least three-quarters of those owed money agree to it. That means no one lender can veto the deal.
An IVA lasts for up to five years, with any remaining money owed being written off at the end of this period.
Those who owe money may prefer an IVA as they are at least taking some responsibility for their debt, whereas bankruptcy may bring the sense of running away from a problem.
Such feelings may be increased in the case of bankruptcy as it carries a certain social stigma and they cannot be kept secret as the local press is entitled to report such declarations. By contrast, an IVA is a confidential agreement, so nobody need know about it.
Furthermore, public attitudes appear to be hardening against bankruptcy.
A recent poll by insolvency professionals body R3 found 82 per cent of respondents believe some people abuse the system by using bankruptcy to wipe out debts caused by reckless spending.
Posted by Paul Thacker