Court-free clickable bankruptcy 'removes stigma'
People facing unmanageable debts can now apply for bankruptcy online, rather than in court - leading to more individuals choosing to do so.
A perceived stigma of court proceedings had been a barrier to some bankruptcy, the Insolvency Service said.
A rule change in April, and cut in cost, has led to more people making themselves bankrupt.
Individuals declaring themselves bankrupt rose 7% in the third quarter of 2016 compared with a year earlier.
Creditors, who are owed money, can also apply to make somebody bankrupt. Owing to fewer of these type of applications, bankruptcy totals in England and Wales were 1.5% lower than a year earlier over the same period.
Bankruptcy and alternatives
Bankruptcy: The traditional way of escaping overwhelming debt. Ends after one year, but there is a possibility you may lose all your assets, including your house, to pay something to the creditors. Since April, applications can be made online and considered by an adjudicator. Costs £680
Individual Voluntary Arrangement (IVA): A deal between you and your creditors, overseen by an insolvency practitioner. Less chance of losing your home, but involves paying some of your debts in one go
Debt Relief Orders: Introduced in April 2009, these allow people with debts of less than £15,000 (£20,000 since October 2015) and minimal assets to write off debts without a full-blown bankruptcy
Taking all forms of insolvency - including bankruptcy - into account, a total of 24,251 people were declared insolvent in the third quarter of the year in England and Wales.
This was a 6% increase on the previous three months, and 19.3% higher than the same quarter last year.
The Insolvency Service said this was driven by an increase in IVAs, which were 29% up year-on-year.
In the year to the end of September, one in 515 adults in England and Wales became insolvent.
Jane Tully, from the Money Advice Trust, the charity that runs National Debtline, said: "Given the economic uncertainty in the current climate, rising prices and the long-term trend of an increase in consumer credit, our concern remains for the minority of households that are struggling financially or are relying on credit to make ends meet. If this is not sustainable long-term, there may be trouble ahead.
"We are therefore urging all borrowers to take stock of their household finances now - and to seek free advice."
In July, Accountant in Bankruptcy (AiB) figures showed that personal insolvency numbers had returned to "relative stability" in Scotland following the introduction of new bankruptcy legislation, including mandatory money advice for some people in debt.