Personal insolvencies increase

Latest monthly figures from the Insolvency Service for England & Wales have indicated that personal insolvency figures increased decreased by 4.1% in February 2025 to 10,147 when compared to January 2025’s total of 9,752, and decreased by 5% when  compared to February 2024’s figure of 10,684.

The personal insolvency figures consisted of 600 bankruptcies, 3,865 debt relief orders (DROs) and 5,682 individual voluntary arrangements (IVAs). The number of DROs in February 2025 was similar to January 2025.

The number of bankruptcies in February 2025 was 600, which is 1% lower than in January 2025 and 10% lower than in February 2024.

The 3,865 DROs was 72% higher than the long-term (2015 to 2024) monthly average of 2,252, although below the record high of 4,340 seen in June 2024. 

The 5,682 IVAs (after seasonal adjustment) registered in February 2025 was 21% lower than in February 2024, but 8% higher than in January 2025.DROs

There were 7,889 breathing spaces registered under the Debt Respite Scheme in February 2025. This is 2% lower than in February 2024. Of the 7,889 breathing space registrations, 7,775 were Standard breathing space registrations and 114 were Mental Health breathing space registrations

Tom Russell, Vice President of R3, the UK’s insolvency and restructuring trade body, said “When it comes to personal insolvencies, the monthly increase is driven by a rise in the number of people entering an Individual Voluntary Arrangement (IVA), while the year-on-year fall in numbers is due to a reduction in IVAs and Bankruptcies.

“It would seem that the cost of Christmas and rising bills have led to more people seeking help with their debts, which is why numbers for this process and for overall personal insolvencies are higher this month than they were last month. These figures serve as a stark warning of the financial challenges facing individuals, especially with the anticipated surge in household bills in April. The upcoming increases in the energy price cap, council tax, and water bills are likely to exacerbate existing debt problems and drive further insolvencies.

“Looking at the insolvency and Breathing Space figures for last month, it’s clear that debt remains a serious issue for many people in England and Wales. People are struggling to manage their expenses in a world where food and energy costs are still rising, and they remain very careful about how they spend their money as they expect this to continue over the next couple of months.

“While consumers appear to be more optimistic about their future finances, they’re still reluctant to make major purchases unless they’re absolutely necessary and are looking to save wherever they possibly can. We’re also hearing reports people are using credit to pay their bills, and while we understand that this isn’t a choice, it’s also not a sustainable means of managing money.”