Personal insolvencies rise by 9.2%

Latest figures from the Insolvency Service have indicated that person insolvencies increased by 9.2% to  9,954 in September 2021 compared to August’s figure of 9,118, and were 33.2% higher than September 2020’s figure of 7,471.

There were  614 bankruptcies were registered, which was 42% lower than September 2020 and 55% lower than September 2019.

Numbers of Debt Relief Orders (DROs) in September 2021 were at their highest level since the start of the pandemic, with 2,150 DROs registered, following changes to the eligibility criteria on 29th June including an increase in the level of debt at which people can apply for a DRO from £20,000 to £30,000. The number of DROs registered was 41% higher than September 2020 but remained lower than pre-pandemic levels (12% lower than in September 2019).

There were, on average, 6,853 IVAs registered per month in the three-month period ending September 2021, which is 48% higher than the three-month period ending September 2020 and 9% lower than the three-month period ending September 2019.

Between the launch of the Breathing Space scheme on 4th May 2021, and 30th September 2021, there were 27,246 registrations, comprised of 26,896 Standard breathing space registrations and 350 Mental Health breathing space registrations.

Commenting on the figures Nicky Fisher, Deputy Vice President of insolvency and restructuring trade body R3 said “The insolvency statistics published today show the economic effects of the pandemic are continuing to take a toll on businesses and consumers.”

“Consumers are now increasingly cautious about the state of the economy, their personal finances and the increased cost of living and are more wary about spending their money.”

“And with widespread supply chain disruption and significant wholesale energy price increases building up between September and October, there is likely to be little slack in the system for businesses and individuals who have yet to get back on their feet following the impact of Covid.”

“When it comes to personal insolvencies, the increase between August and September was driven by a rise in Individual Voluntary Arrangements and DROs. This suggests that more people are in debt and taking steps to resolve the issues they face with their finances, but also that the situation is still tough out there for people in England and Wales.

“Although September saw increases in job vacancies and the number of people in work returned to pre-pandemic levels, a high percentage of those employed are in temporary roles, and more than a million people were still on furlough when the programme closed at the end of the month.”

“Government support has been a lifeline for many, and initiatives like the Breathing Space scheme have proved welcome support for people in financial distress. However, this support has not been able to help everyone, and many people have had to use savings to cover expenditure during the pandemic.”