Personal insolvencies fall in January

Latest statistics from the Insolvency Service have shown that personal insolvencies in England & Wales decreased by 13.7% to 8,305 in January 2020 compared to December’s figure of 9,623, and were 20.8% lower than January 2020’s figure of 10,482. Overall, numbers of individual insolvencies have remained low since the start of the first UK lockdown in March 2020

The number of bankruptcies in January 2021 was 818. The bankruptcies were made up of 740 debtor applications and 78 creditor petitions.

The number of Debt Relief Orders (DROs) was 1,167. Both were 47% lower than in January 2020. There were, on average, 6,950 IVAs registered per month in the three-month period ending January 2021, 17% higher than for the three-month period ending January 2020.

The average number of IVAs registered per month in the three-month period ending January 2021 was higher than the same period last year, though data are volatile

Commenting on the figures Colin Haig, President of insolvency and restructuring trade body R3 and Head of Restructuring at Azets said “On the personal insolvency side, the month-on-month and year-on-year fall in personal insolvencies is striking. However, it’s worth noting that a fall in Individual Voluntary Arrangements accounts for most of the change between December 2020 and January 2021, while a lower level of Debt Relief Orders and bankruptcies is mainly driving the fall between January 2020 and January of this year.

“This decline in individual insolvency levels contradicts recent surveys, which have found evidence of rising personal debt levels and increasing concern among consumers about their finances and financial futures.”

“As the pandemic continues to affect businesses, unemployment is rising and the number of claims for out of work and low-income benefits are increasing, but this is still not fully translating to higher levels of personal insolvency.”

“The Government’s support measures have preserved a large number of jobs, which is undoubtedly keeping individual insolvency levels relatively low. However, those who have been furloughed are likely to have had their income reduced from pre-pandemic levels, which will cause additional financial pressures and stress.”

“Many are struggling financially as a result of the pandemic, and are vulnerable to the kind of sudden unexpected issues that can push them into insolvency, like a missed benefit payment, the end of a relationship, or a cut in hours at work.”