The number of people going bankrupt has fallen to a 15-year low official figures show, raising hopes for a brightening economy.
Insolvency Service figures reveal that 4,886 bankruptcy orders were made between July and September in England and Wales - a fall of 19 per cent compared with the same period a year ago and the lowest level recorded since the first quarter of 1999.
A total of 24,837 people went into some form of insolvency in the third quarter of this year, the lowest figure recorded since last winter.
Bankruptcies are one of three types of formal personal insolvency and tend to be a last resort for people with catastrophic debt problems. They have been on a general downward trend since the introduction of another type of insolvency, debt relief orders (DROs), which are aimed at people with smaller amounts of debt.
The new figures showed that 6,808 people took out a DRO between July and September - down by three per cent on the previous quarter.
The third type of personal insolvency, individual voluntary arrangements (IVAs), reached a record high in the second quarter of this year, but figures now show that they fell back by nine per cent in the third quarter, with 13,143 cases recorded.
IVAs usually require people to pay back as much money as they can afford to creditors over a five-year period.
Overall, personal insolvencies are on a “generally decreasing trend”, the Insolvency Service said.
Mike Cartwright, policy executive for the West and North Yorkshire Chamber of Commerce, said: “The figures indicate that there is more stability in the economy and so that is to be welcomed.
“We don’t keep our own figures on bankruptcies so we are unable to comment on how the regional picture compares with the national one. However we can say that there are still lots of pressures on businesses. Difficulties with cash flow, late payments and access to finance are still cited by many firms as the key issues affecting future performance and investment and these are particularly important for the smaller businesses.
“We hope that these official bankruptcy figures continue to fall as we return to growth. Recent Chamber research shows that more companies are expecting workforces to increase over the next 12 months and that pay increases are at least in line with inflation so these are positive signs of good things happening.”
But people are being warned to prepare for borrowing costs to increase as the Bank of England base rate is expected to rise above 0.5 per cent next year.
Giles Frampton, president of insolvency trade body R3, said research found that 44 per cent of adults are worried about their level of debts, while one in four 25-to-44-year-olds have five or more debts to their name, “so falling insolvency numbers do not necessarily mean the UK’s personal debt issue is going away”.