The personal insolvency figures released yesterday by the Government’s Insolvency Service show a continuing fall in the number of people who need to use a legal process to deal with their debts.

However, as always, it’s when you look behind the broad headlines that you get to see things that could become much more significant in months and years to come.

Debt relief orders have nearly doubled

Firstly, look at Debt Relief Orders (DROs) – they’ve nearly doubled from 15% of personal insolvencies in 2009-2010 to 29% in the year ending in June 2015.

Whilst bankruptcies have declined from just under half of all personal insolvencies in 2009-2010 to only one in five now, Individual Voluntary Arrangements (IVAs) still account for more than half of all personal insolvencies, though it looks likely this will change by the end of the year.

That won’t just be the economy talking. In October DROs are changing to make them more versatile and appropriate for a larger numbers of debtors – so DRO numbers should rise – possibly quite sharply, if not this autumn then certainly by early 2016.

This may push IVA numbers down, but maybe not – instead they, and low debt, low contribution IVAs may cannibalise the informal debt management market – which is not recorded in any official statistics.

People are now more likely to be made bankrupt

There is another small but noteworthy development, which some may see as a little more sinister. People are now much more likely to be made bankrupt by their creditors than they were just five years ago.

Back then the banks, credit card companies and others to which we owed money were responsible for starting 15% of bankruptcies. In April-June this year it was 26% – that’s close to a 60% rise.

Money Advice Service, the Financial Conduct Authority and others have all been seeking more forbearance from the consumer credit industry. Either the proportion of really difficult cases has shot up or the message isn’t getting through.

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