Latest figures from the Insolvency Service have indicated that personal insolvency numbers across England & Wales fell by 14% in May 2021. Personal insolvencies numbers fell to 8,482 when compared to April’s figure of 9,864, and were 38.7% lower than May 2020’s figure of 13,838.

The figures show that there were 1,525 DROs and 718 bankruptcies. The number of DROs in May 2021 was similar to in May 2020 and 33% lower than in May 2019.

The bankruptcies were made up of 647 debtor applications and 71 creditor petitions.

For individuals, 718 bankruptcies and 1,525 Debt Relief Orders were registered. The number of Bankruptcies was similar to May 2020 and 50% lower than during May 2019. DRO numbers were similar to May 2020, but 33% lower than in May 2019 (pre-pandemic).

There were, on average, 7,393 IVAs registered per month in the three-month period ending May 2021, which is similar to both the three-month periods ending May 2020 and May 2019.

Bankruptcies were 3% lower than in May 2020 driven by a drop in debtor applications (6% lower), but creditor petitions were 39% higher. It should be noted that creditor petitions were particularly low in May 2020 as this was during the first UK lockdown. Compared to May 2019, total bankruptcies were 50% lower; debtor applications were 44% lower and creditor petitions were 76% lower.

Commenting on the figured Duncan Swift, Immediate Past President of insolvency and restructuring trade body R3 and Restructuring and Insolvency Partner at Azets said “On the personal insolvency side, the decrease in numbers compared with both last month and May 2020 can be attributed to a fluctuation in Individual Voluntary Arrangements, with numbers of bankruptcies and Debt Relief Orders holding more or less steady.”

“When it comes to personal insolvencies, Government and private sector support has aided many people – with the furlough scheme protecting millions of jobs. However, those who have been furloughed may have struggled to cope with any reduction in salary, as well as the potential uncertainty around their employment.

“We hope the new Debt Respite Scheme, which gives people in debt a breathing space free from creditor pressure in which to seek help, will be taken up by more and more people, after its launch in early May.

“We know it can be tough to talk about financial concerns – whether they’re personal or business – but doing so can make a huge difference. Anyone concerned about their financial situation should seek advice as soon as possible, so they can understand what options are available to them and so they have the most time to decide on an appropriate next step.”

Whilst Louise Brittain, Restructuring and Insolvency Partner and personal insolvency specialist at Azets said “The total number of court-led personal insolvencies are almost a mirror image of the numbers in May 2020. However, when you drill down into the details, there are interesting shifts in who is initiating the court process. The number of people choosing to go bankrupt has fallen from 690 to 647 but the number of creditors forcing individuals into bankruptcy (creditors petitions) has risen by almost 40% from 51 to 71. The court is only hearing urgent or contentious creditors petitions and so this is an interesting increase as it means creditors are  perhaps now taking action against the worst offenders.

“The most dramatic drop is in the number of people choosing to enter into Individual Voluntary Arrangements which has dropped from 11570 a year ago to 6239. This again means that individuals are choosing not to enter into debt arrangements which may be because creditors are still offering Covid relief where the borrowing is genuine and therefore these individuals are managing to organise their own debt management arrangements for now at least.”