Personal insolvencies fall by 11%

Latest monthly figures from the Insolvency Service for England & Wales have indicated that personal insolvency numbers fell 11% in August 2023 when compared to August last year.

The personal insolvency figures totalled 8,536 compared to the same month in the previous year (9,584 in August 2022).

Personal insolvency figures consisted of 648 bankruptcies, 2,714 debt relief orders (DROs) and 5,174 individual voluntary arrangements (IVAs). The lower number of individual insolvencies compared to August 2022 was driven by a decline in the number of IVAs. DRO and bankruptcy numbers were higher than last year, although the number of bankruptcies remained less than half of pre-2020 levels.

There were 7,235 Breathing Space registrations in August 2023, which is 19% higher than the number registered in August 2022. 7,119 were Standard breathing space registrations, which is 19% higher than in August 2022, and 116 were Mental Health breathing space registrations, which is 33% higher than the number in August 2022.

There were 2,714 DROs in August 2023. This was 40% higher than August 2022. DRO numbers were volatile in early 2023 at the time of introduction of new DRO hubs and are now slightly higher than pre-2020 levels.

There were 5,174 IVAs registered in August 2023, 27% lower than August 2022. IVA numbers so far in 2023 have been lower than 2022, which had a record high annual number of IVAs.

There were 648 bankruptcies in August 2023 in England & Wales. The bankruptcies were made up of 522 debtor applications and 126 creditor petitions. Bankruptcies were 12% higher than in August 2022. Debtor applications were 6% higher and creditor petitions 43% higher than in August 2022. Bankruptcy numbers in the first eight months of 2023 were slightly higher than in the first eight months of 2022, but remained less than half of pre-2020 levels.

In August 2023 there were 7,235 breathing space registrations. This is 19% higher than the number in August 2022. Of the 7,235 Breathing Space registrations in August 2023 there were 7,119 Standard breathing space registrations, which is 19% higher than the number in August 2022.

There were 116 Mental Health breathing space registrations, which is 33% higher than the number in August 2022.

Nicky Fisher, President of R3, the UK’s insolvency and restructuring trade body said “Turning to personal insolvencies, while numbers rose month-on-month, driven by a monthly rise in Individual Voluntary Arrangement numbers and Debt Relief Orders reaching a six-month high, the total figures still fell compared to one, two and four years ago.”

“This suggests that while the cost-of-living crisis is leading to more people seeking help from the insolvency profession with their financial issues, it’s more of short-term help – the kind which doesn’t require the sale of major assets.”

“Despite this, money matters are still a major worry for many. People are concerned about their finances, the future of the economy, and the cost of housing, energy and groceries. Other worries include job security, and how they’ll manage their money as the year goes on.”

“All the signs point to more people needing some form of financial help in the future, and this could result in an increase in the number of individuals turning to a personal insolvency process to resolve their financial issues.”