Personal insolvencies fall by 5%

Latest monthly figures from the Insolvency Service for England & Wales have indicated that personal insolvency figures fell by 5% with a total of 10,000 individuals entering into insolvency.

The personal insolvencies consisted of 594 bankruptcies, 4,166 debt relief orders (DROs) and 5,240 individual voluntary arrangements (IVAs).

The number of bankruptcies in August 2024 was 594, which is lower than monthly numbers seen over the past 12 months. Bankruptcy numbers have declined since 2009 and fell further during the Covid 19 pandemic. Numbers remain much lower than the long-term (2014 to 2023) monthly average of 1,129.

In August 2024, there were 4,166 DROs, which is similar to the number registered in July 2024 and 5% lower than the record high monthly number seen in June 2024. The last five months all saw the highest monthly numbers of DROs since their introduction. This followed the removal of the £90 administration fee to obtain a DRO from 6 April 2024 and the expansion of eligibility criteria in June 2024.

The number of IVAs registered in August was similar to the average monthly number over the past 12 months. Bankruptcy numbers remained at about half of pre-2020 levels and were also lower than numbers seen over the past 12 months.

There were 7,256 Breathing Space registrations in August 2024. This is 5% lower than in August 2023  Of the 7,256 breathing space registrations, 7,138 were Standard breathing space registrations and 118 were Mental Health breathing space registrations.  

Tim Cooper, President of R3, the UK’s insolvency and restructuring trade body and a partner at Addleshaw Goddard LLP said “Personal insolvencies numbers are lower than last month, they are significantly higher than they were this time last year. The key driver of this is an increase in the number of people entering a Debt Relief Order as result of changes in the thresholds and the removal of the entry fee for this process.

“The personal insolvency and Breathing Space figures illustrate what we’ve been hearing in the market: household finances in England and Wales remain stretched and financial and economic worries are a reality for many consumers. Right now, people are tightly watching their everyday expenses and cutting back their spending wherever they can, and with the energy price cap expected to rise in the winter months, this behaviour in unlikely to change and these worries are unlikely to abate until at least the end of the year.”

Matt Hartley, Director of Engagement at the Money Advice Trust, the charity that runs National Debtline, said “High Debt Relief Order registration levels show no sign of abating soon, as households continue to struggle with unaffordable debts.  

 “While the welcome removal of the £90 fee for DROs has led to an increase in registrations, the record levels we’re now seeing also reflect the significant need for debt help as the impact of cost of living pressures continue to hit households.”