Personal Insolvencies increased by 8% last year

Annual from the Insolvency Service for England & Wales have shown that there were 118,851 seasonally adjusted personal insolvencies in 2022, an increase of 8% on 2021’s figure of 110,044, rise of 6.5% on 2020’s figure (111,571) and a fall of 2.2% compared to pre-pandemic levels in 2019 (122,148)

One in 399 adults (at a rate of 25.0 per 10,000 adults) entered insolvency in 2022. This is higher than the 23.3 per 10,000 adults who entered insolvency in 2021 but a decrease from the 26.1 per 10,000 adults who entered insolvency in 2019 (before the coronavirus (Covid-19) pandemic).

2022 saw the lowest annual number of bankruptcies since 1982, while numbers of DROs were higher than 2021 but remained below pre-pandemic levels. The annual number of IVAs in 2022 increased from the previous record high in 2021. IVAs accounted for 74% of all individual insolvencies.There were 70,546 registered breathing spaces in 2022, comprised of 69,334 Standard and 1,212 Mental Health breathing space registrations. Average quarterly Breathing Space numbers were 14% higher than in 2021. Since the start of the scheme in 4 May 2021, more than 110,000 breathing spaces have been registered.

The composition of individual insolvencies has changed over the past 10 years. In 2012, 29% of insolvencies were bankruptcies, 28% DROs and 43% IVAs, but by 2019 nearly two-thirds were IVAs. This trend accelerated during the coronavirus pandemic and in 2022 nearly three-quarters (74%) of individual insolvencies were IVAs, with 20% being DROs and only 6% were bankruptcies.

Christina Fitzgerald, President of R3, the insolvency and restructuring trade body and Partner at Edwin Coe LLP said “Personal insolvencies reached their highest numbers for three years in 2022 as a result of more people turning to Individual Voluntary Arrangements and Debt Relief Orders to resolve their financial issues as the cost of living crisis and falling wages took its toll on their finances.”

“However, it’s worth noting that bankruptcy numbers are at a 10-year low, which suggests that more people are seeking and agreeing arrangements with their creditors earlier. The last 12 months have been tough for UK households. Money worries have been front of mind for many as the increased costs of heating, eating and fuel has meant budgets are stretched.”

“People are anxious about the economy, their personal finances and rising prices, and are reluctant to make major purchases as the money they do have available goes to pay for necessities. Further news today that grocery price inflation remains worryingly high will only add to the pinch being felt by many households across the UK.”

“More and more are turning to borrowing to cover their costs, which can make them more vulnerable to the kind of shocks that lead them to become insolvent. While we understand why people would take this step, it’s not an advisable one.”

Year	Total individual insolvencies	Bankruptcies	Debt relief orders	Individual voluntary arrangements
2018	115,011	16,643	27,683	70,685
2019	122,150	16,743	27,467	77,940
2020	111,571	12,657	20,473	78,441
2021	110,045	8,721	20,135	81,189
2022	118,850	6,662	24,219	87,969
Percentage change, 2022 compared with:
2021	8%	-24%	20%	8%
2019	-3%	-60%	-12%	13%