Latest figures from the Insolvency Service have indicated that personal insolvency numbers across England & Wales increased by 15.8% in June 2021.
Personal insolvencies rose by 9,836 in June 2021 compared to May’s figure of 8,497, and were 18.8% higher than June 2020’s figure of 8,282.
The figures show that there were 735 bankruptcies and 1,410 Debt Relief Orders were registered. The number of Bankruptcies was 17% lower than June 2020 and 44% lower than June 2019. DRO numbers were 21% lower than June 2020 and 33% lower than in June 2019 (pre-pandemic). The bankruptcies were made up of 645 debtor applications and 90 creditor petitions.
There were, on average, 7,184 IVAs registered per month in the three-month period ending June 2021, which is 15% lower than the three-month period ending June 2020 but 11% higher than the three-month period ending June 2019.
Between the launch of the Breathing Space scheme on 4th May 2021, and 30th June 2021, there were 11,747 registrations, comprised of 11,636 Standard breathing space registrations and 111 Mental Health breathing space registrations.
The Breathing Space scheme gives people legal protection from their creditors for 60 days, with most interest and penalty charges frozen, and enforcement action halted. Because problem debt can be linked to mental health issues, these protections are also available for people in mental health crisis treatment – for the full duration of their crisis treatment plus another 30 days.
Commenting on the figures Christina Fitzgerald, Vice President of insolvency and restructuring trade body R3 said “The rise in personal insolvencies can be attributed to an increase in Individual Voluntary Arrangements.”
“When it comes to personal insolvency, the figures show the damaging effect of the pandemic on people’s personal finances and their financial health. While the pandemic has led to many people repaying their debts and boosting their savings, others have borrowed more, used their savings to cover a shortfall in income or deferred paying certain debts. It’s these people who are financially vulnerable as things tentatively return to normal – and maybe one unexpected shock away from running into trouble.”
“Although unemployment has yet to return to its pre-Covid levels, the increase in job vacancies to numbers not seen since 2018 suggests that employment at least could be returning to a more positive place.”