Personal insolvencies increase by 17.2%

Latest figures from the Insolvency Service have indicated that personal insolvencies in England & Wales increased by 17.2% to 11,530 in March 2022 compared to 9,836 in February and were 5.3% higher than March 2021’s figure of 10,953.

There were 2,512 DROs and 633 bankruptcies in March 2022 in England & Wales. The number of DROs in March 2022 was 58% higher than in March 2021, and 3% higher than in March 2019. This is the first time since the start of the pandemic that numbers have been higher than the pre-pandemic comparison month. Changes to DRO eligibility came into effect on 29 June 2021, including an increase in the level of debt at which people can apply for a DRO from £20,000 to £30,000. 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 549 debtor applications and 84 creditor petitions. Monthly bankruptcy numbers between July 2021 and March 2022 were lower than the numbers in 2020, which were already lower than pre-pandemic levels.

In March 2022 there were 6,261 breathing space registrations. This was made up of 6,139 (98.1%) standard breathing space registrations and 122 (1.9%) mental health breathing space registrations.

Bankruptcies were 39% lower than in March 2021. Debtor applications were 41% lower and creditor petitions were 20% lower than in March 2021.

Compared to March 2019, total bankruptcies were 59% lower; debtor applications were 57% lower and creditor petitions were 69% lower.

There were, on average, 7,136 IVAs registered per month in the three-month period ending March 2022, 12% higher than for the three-month period ending March 2021 and 14% higher than the three-months ending March 2019.

Personal insolvency numbers were also 47.2% higher than in March 2020 (7,832).

Colin Haig, President of R3, the insolvency and restructuring trade body, said “Turning to the personal insolvencies, the monthly increase is being driven by a rise in Individual Voluntary Arrangements and Debt Relief Orders (DROs).”

“The increase in DRO numbers can largely be attributed to the widening of the eligibility criteria for this procedure introduced at the end of June 2021, which has led to a greater number of people being able to deal with their financial difficulties through this procedure.”

“The crossover between the end of the pandemic and the increases in energy, fuel and food has hit personal finances in England and Wales hard.”

“Credit card borrowing has increased and savings levels have dropped as people attempt to cope with the rising cost of living, and while unemployment levels are falling, wages have failed to keep pace with inflation.”

“And with no sign that price rises are likely to slow for some time, the situation could be set to become more challenging as the year goes on.”