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The number of people who went bankrupt fell by 24 per cent in 2012 while the total number of personal insolvencies fell by eight per cent, according to the government’s official insolvency statistics released today.

The figures show that in total 109,477 people became insolvent last year, compared to 119,941 in 2011. The figure includes people who went bankrupt or took out an IVA (Individual Voluntary Arrangement) or DRO (Debt Relief Order).

Jeremy Oddie, North West chair of R3 and head of recoveries at Mitchell Charlesworth, said: “The fall in insolvencies is encouraging, but should not be taken as an indication that people are prosperous and financially secure. There are still a lot of people who are struggling with their personal finances, which is evidenced by the fall in consumer spending as people continue to prioritise paying off their debt.

“People typically go bankrupt because of credit card and bank debt but recently lenders have been putting more manageable repayment plans in place, allowing people to pay off their debts over a longer period.

“Stagnating wages and rising living costs continue to push household budgets to breaking point. Recent research by R3 revealed that 59 per cent of people in the North West are concerned about their debts. One in ten is paying off the interest only on their credit card without reducing the amount owed while one in 20 is in a debt management plan.

“We are seeing an increasing number of new lenders in the market such as pay day loan companies and car log book lenders. The worry is that a hiddenwave of debt is building up with these lenders and it could be some time before we start to see the fall-out.”