Credit, collections & insolvency news
Annual figures from the Insolvency Service for England & Wales have indicated that personal insolvency figures fell by 13%
The number of personal insolvencies registered in 2023 was 103,454, lower than the 118,766 in 2022. The number of personal insolvencies was the lowest annual number since 2017.
However 2023 saw the lowest annual number of Individual Voluntary Arrangements (IVAs) since 2017, accounting for 62% of all individual insolvencies, down from 74% in 2022.
Debt Relief Order (DROs) were at the highest annual level since their introduction in 2009. DROs increased by 31%, with the 31,717 DROs in 2023 being a record high annual number.
Bankruptcies increased 15% from the 40-year low in 2022, but remained less than half of pre-2020 levels.
There were 88,390 registered breathing spaces in 2023, comprised of 86,928 Standard and 1,462 Mental Health breathing space registrations. Breathing Space numbers were 25% higher than in 2022. Since the start of the scheme on 4 May 2021, more than 200,000 breathing spaces have been registered.
Personal insolvency numbers peaked in 2009 and 2010 following the recession in 2008-09, before decreasing over the next five years as the number of bankruptcies declined. An increase in IVA numbers between 2015 and 2019 then resulted in a corresponding increase in overall insolvency numbers. During the coronavirus pandemic, numbers of bankruptcies and DROs decreased and the increase in IVA numbers slowed, so overall numbers were lower during 2020-2022 than in 2019. Numbers then declined in 2023 to the lowest level since 2017.
The composition of individual insolvencies has changed over the past 10 years. In 2013, 24% of insolvencies were bankruptcies, 27% DROs and 48% IVAs, but by 2019 nearly two-thirds were IVAs. This trend accelerated during the coronavirus pandemic and in 2022 nearly three-quarters (74%) of individual insolvencies were IVAs, with 20% being DROs and only 6% were bankruptcies. However, in 2023 the trend reversed as a result of increasing DRO numbers and decreasing IVA numbers, with 62% of individual insolvencies being IVAs, 31% DROs and 7% bankruptcies.
Nicky Fisher, President of R3, the UK’s insolvency and restructuring trade body said “Turning to personal insolvencies, the fall in figures between 2022 and 2023 masks the fact that demand for debt advice and support is still high in England and Wales.
“Although Individual Voluntary Arrangement numbers have fallen compared to last year, Breathing Space numbers have soared, and Bankruptcy and Debt Relief Order figures are higher than in 2022. This suggests people with lower levels of debt are opting for a different kind of support than the one offered by a formal insolvency process like an IVA, while the number of people who need help managing higher debt levels is on the rise compared to last year.
“We also know that there is often a time-lag between people facing serious financial difficulties and the release of personal insolvency statistics, so the figures seen in government data may not be a real-time representation of the current hardships faced by many UK households.
“Financial distress and money worries are still serious problems in England and Wales, and the last 12 months have hit many people’s finances hard. Rising bills, food and fuel prices were a major concern and a major expense in 2023, while high inflation forced up interest rates and left a lot of people worrying about the costs of mortgages and loans.
“Although inflation is now falling, the prices of food, energy and fuel are still a worry for many, and could lead to an increase in personal insolvencies over the next year – especially if a cold start to 2024 leads to a further rise in energy bills.”