Personal insolvencies increase by 15.8%

Latest figures from the Insolvency Service have indicated that personal insolvencies in England & Wales increased by 15.8% to 9,825 in February 2022 compared to 8,486 in January, and were 43.7% higher than February 2021’s figure of 6,839. They were also 14.4% higher than in February 2020 (8,590).

There were 2,242 DROs and 588 bankruptcies. The number of DROs in February 2022 was 61% higher than in February 2021, but 6% lower than in February 2020. Changes to DRO eligibility came into effect on 29th June 2021, including an increase in the level of debt at which people can apply for a DRO from £20,000 to £30,000 (as indicated on Figure 3). The increase in the number of DROs registered since June 2021 is likely to have been caused by this expansion of the eligibility criteria.

The bankruptcies were made up of 495 debtor applications and 93 creditor petitions. Monthly bankruptcy numbers between July 2021 and February 2022 were lower than the numbers in 2020, which were already lower than pre-pandemic levels.

Bankruptcies were 36% lower than in February 2021. Debtor applications were 39% lower and creditor petitions were 13% lower than in February 2021.

There were, on average, 6,384 IVAs registered per month in the three-month period ending February 2022, 4% higher than for the three-month period ending February 2021 and 15% higher than the three-months ending February 2020.

Between 4 May (when the scheme was launched) and 28 February 2022 there were 52,201 breathing space registrations. These composed of 51,415 standard breathing space registrations and 786 mental health breathing space registrations (for those receiving mental health crisis treatment).

In February 2022 there were 5,795 breathing space registrations. This was made up of 5,705 (98.4%) standard breathing space registrations and 90 (1.6%) mental health breathing space registrations.

Compared to February 2020, total bankruptcies were 62% lower; debtor applications were 63% lower and creditor petitions were 56% lower.

Commenting on the figures Christina Fitzgerald, Vice President of insolvency and restructuring trade body R3 said “The increase in personal insolvencies is being driven by a rise in Debt Relief Orders and Individual Voluntary Arrangements. This suggests that more people are looking for help with resolving their financial issues and to come to an arrangement to manage their debts.”

“It’s clear that the economic issues of the last two years are starting to take their toll on people’s financial health. In addition to the issues created by the pandemic, rising fuel and energy costs are a big concern for many and wages are failing to keep pace with inflation. As a result, there are a lot of people who are worried about their financial prospects in the months ahead.”