According to a recent report there has been an unexpected fall in insolvency figures in the second quarter of this year, with officials stating that consumers appear to be getting far more cautious over their spending and borrowing in light of the global credit crunch and the current difficult financial conditions and rising costs that most are experiencing. The first quarter of this year saw a rise in insolvency levels for the first time in years, and this was a trend that many thought would continue.

Compared to the first quarter of this year insolvency levels dropped by 2% according to figures, bringing the total number to 24,553. This also put insolvency levels for the second quarter at 8% lower than the second quarter of last year according to the figures from the Insolvency Service. Figures have fallen for both those entering into the softer form of bankruptcy known as an IVA or Individual Voluntary Arrangement, and for those declaring themselves bankrupt in the traditional way.

Officials have said that the global credit crunch was causing consumers to be more cautious with their finances, and that this had affected figures.

An official from the Insolvency Service stated: ‘I’m not sure the credit crunch is the sole factor in the decrease, but it is definitely affecting people’s decisions on how they should handle their debt. It is impossible to pinpoint one particular reason from these figures, but economic conditions and available credit are factors.’

Another official said that whilst insolvency figures had fallen in the second quarter ‘it’s important to bear in mind that this is from historically very high levels. The rates are still significantly higher than during the previous five years and I would expect this general upward trend in personal insolvencies to continue in the short to medium term.’