Personal insolvency numbers fall by 7%

Latest monthly figures from the Insolvency Service for England & Wales have indicated that there were 9,205 personal insolvencies in England and Wales during March 2025, which was 7% lower than in February 2025 but 2% higher than in March 2024.

The personal insolvencies consisted of 613 bankruptcies, 3,490 debt relief orders (DROs) and 5,102 individual voluntary arrangements (IVAs). The 3,490 DROs registered in March 2025 was 55% higher than the long-term (2015 to 2024) monthly average of 2,252, although below the record high of 4,331 seen in June 2024.

The 5,102 IVAs registered in March 2025 were 9% lower than in March 2024 and 9% lower than in February 2025.

In March 2025, there were 3,490 DROs. This is 4% lower than the number registered in February 2025 and 19% lower than the record high seen in June 2024. The number of DROs in March 2025 was 55% higher than the long-term (2015 to 2024) monthly average of 2,252.

The number of bankruptcies in March 2025 was 613, which is similar to the number in February 2025 but 11% lower than in March 2024, with the decline being driven by debtor applications.

There were 8,033 breathing spaces registered under the Debt Respite Scheme in March 2025. This is 4% higher than in March 2024. Of the 8,033 breathing space registrations, 7,932 were Standard breathing space registrations and 101 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 “When it comes to personal insolvencies, the monthly decrease is down to a fall in Debt Relief Order (DRO) and Individual Voluntary Arrangement (IVA) numbers, while the year-on-year increase is driven by an increase in DRO levels, and is likely to be because of the changes to the DRO entry criteria that were introduced in April of last year. When these trends and the fact that Breathing Space numbers have increased month-on-month and year-on-year are considered, it is clear that there is still a real and serious issue with debt in England and Wales, and the severity of that is increasing.

“The key factor behind this is likely to be the ongoing cost of living, which continues to be an issue for households across England and Wales. While inflation is slowing, people’s money is still going less far than it did three, six and 12 months ago, and a number of household bills have increased from this month, which will put further pressure on stretched finances and cause increased concern for those for whom money is already tight.

“Cost-consciousness is making people cautious about their spending and causing them to continue to hunt for deals wherever they possibly can. However, these cuts are likely to come from the weekly shop, as there is still some willingness to spend on non-essentials. More broadly, consumers remain concerned about the economy and their own finances, and are reluctant to make major purchases unless they are strictly necessary amidst concern about the impact the tariffs, rising bills and the potential for further increases in inflation could have on their outgoings.”

Andy Nalliah, Personal Insolvency Partner at RSM UK said “It is interesting that following the expected surge in DROs throughout the spring and summer of 2024, DRO registrations appear to have stabilised. However, the 10,803 registrations in Q1 2025 still represent a 28% rise on the same quarter in 2024 and we expect similar numbers going forward. It is clear, therefore that the abolition of the application fee in April 2024, and the subsequent increase in the asset and debt level thresholds, has presented an appropriate alternative to bankruptcy for debtors with lower levels of debt.

“Despite the increase in bankruptcy numbers in Q1 2025, this was still a 10% decrease on the same quarter last year. Interestingly, though, creditors’ petition has led bankruptcy numbers have increased this quarter as a percentage of total bankruptcies, accounting for 27% of all bankruptcies in Q1 2025, up from 25% in Q4 2024.

“Breathing space registrations rose 14% to 24,162 in Q1 2025 – the highest level since Q1 2024. There appears to be a pattern emerging with breathing space registrations, reaching their highest in the first quarter for the previous two years, which may be a sign of debtors’ willingness to get their finances in order in the new year.

“The number of IVAs registered in the quarter continues to deviate. Whilst the 3% reduction equates to only 492 fewer registrations in Q1 2025, this decrease is responsible for the overall fall in personal insolvencies this quarter. Furthermore, the Q1 IVA registrations have fallen year-on-year for the third successive year since their Q1 2022 peak.”