Personal insolvencies fall 20%

Latest monthly figures from the Insolvency Service for England & Wales have indicated that personal insolvency figures were 20% lower than in the same month in the previous year.

There were 6,584 insolvencies in December 2023,  compared to i8,254 in December 2022). The lower number of individual insolvencies compared to December 2022.

The personal insolvencies consisted of 496 bankruptcies, 2,472 debt relief orders (DROs) and 3,616 individual voluntary arrangements (IVAs).

The lower number of individual insolvencies compared to December 2022 was driven by a 38% decline in the number of IVAs. IVA numbers in 2023 were lower than in 2022, which saw a record high annual number. DRO and bankruptcy numbers were higher than last year, with DROs in December 2023 being 25% higher than in December 2022, although the number of bankruptcies remained well below pre-2020 levels.

There were 3,616 IVAs registered in December 2023, 38% lower than December 2022. IVA numbers in 2023 were lower than the record-high numbers in 2022.

DROs were 25% higher than December 2022. DRO numbers were volatile in early 2023 at the time of introduction of new DRO hubs and increased in 2023 compared to 2022.

There were 496 bankruptcies in December 2023. The bankruptcies were made up of 386 debtor applications and 110 creditor petitions. Bankruptcies were 22% higher than in December 2022. Debtor applications were 20% higher and creditor petitions 28% higher than in December 2022. Bankruptcy numbers in 2023 were higher than in 2022, but remained below pre-2020 levels.

In December 2023 there were 5,769 breathing space registrations. This is 15% higher than the number in December 2022. Of the 5,769 Breathing Space registrations in December 2023: There were 5,657 Standard breathing space registrations, which is 15% higher than the number in December 2022.

There were 112 Mental Health breathing space registrations, which is 4% lower than the number in December 2022.

Nicky Fisher, President of R3, the UK’s insolvency and restructuring trade body said  “When it comes to personal insolvencies, the monthly fall in numbers is due to fewer people entering all three of the main personal insolvency processes, while a reduction in Individual Voluntary Arrangement numbers is behind the year-on-year fall in figures.

“However, the year-on-year increase in the number of people entering a Breathing Space suggests that demands for debt support are still high, but that people aren’t reaching the point where they need formal personal insolvency support.

“December is always a difficult month financially – and this one was no different. Many people were considering cutting their spending back to pay for Christmas, or had already saved or considered borrowing money to pay for it.

“As we head into the spring, it’s likely that energy costs will continue to be a concern for many people with an increase in price caps from this month and government support coming to an end for many from next month.

“While food inflation and the price of petrol has been falling, events developing in the Middle East are likely to lead to renewed upward pressure on prices and could delay interest rate cuts. Combined, these factors could see insolvencies rise next month if these ongoing expenses become too much to manage.”