There has been an observed decline in the bankruptcy of people and companies in England and Wales the past months. However, experts are still raising cautions as the said improvement may not last for a long time.

Figures show that a total of 33,935 personal insolvencies in the quarter of September which amounts to a 3.7% less than that of the same period in the previous year. This report was made by the Insolvency Service. Reports say that this is still well above levels prior to the economic downturn. 3,974 firms were recorded to have undergone liquidation which is 13.9% down on the year. This record is a fall of 2.2% than that of last year.

The said insolvencies were made up of bankruptcies, individual voluntary arrangements, and debt relief orders.

During the first three months of the current year, the figure of individual insolvencies reached a total of 35,682.

On the other hand, analysts are still raising warnings specifically for smaller companies as there are possibilities that difficult conditions may keep on due largely to the bank credit remaining tight and the government austerity measures still not into its full implementation.

Analysts further stated that banks and other creditors which include the HM Revenue and Customs were reluctant to compel companies into formal insolvency. However, should government make some cutbacks and feed them into the economy or interest rates rise, the situation might worsen in the days to come.

A research made by the trade body of insolvency professionals known as R3, one in five businesses remains worried by the debt levels. R3 stated that if the servicing debt is to become more expensive, more corporate insolvencies could be triggered. The trade body also predicted that 27,500 corporate insolvencies might occur in the coming year.

R3 stated that the official figures on personal insolvencies were only the ‘tip of the iceberg’, having almost one million people who are believed to be struggling with debt but are not seeking advice. 500,000 people were said to be taking steps to deal with debt in ways which were not captured by official data.

Lousie Brittain of the Deloitte stated that even though a high number of people filing for bankruptcy have become the norm and the recent figure indicated a decrease in the number, this should not be taken as the sole sign of what is to come.