Personal insolvencies fall by 4%

Latest monthly figures from the Insolvency Service for England & Wales have indicated that personal insolvency figures fell by 4% in May 2024 with a total of 9,266 personal insolvencies registered when compared to last month.

Personal insolvencies decreased by 7.2% when compared May 2022’s total of 9,986 and decreased by 15.7% compared to pre-pandemic levels in May 2019 (10,989).

The personal insolvency data consisted of 604 bankruptcies, 3,716 debt relief orders (DROs) and 4,946 individual voluntary arrangements (IVAs).

The number of IVAs registered in May was lower than the numbers seen over the past 12 months. The number of DROs in May 2024 increased compared to April 2024, which had already set a record high in the monthly time series going back to their introduction in 2009. The higher DRO numbers in April and May 2024 coincided with the removal of the £90 administration fee to obtain a DRO from 6 April 2024. Bankruptcy numbers remained at about half of pre-2020 levels, lower than in the past 12 months and slightly lower than in May 2023.

The number of bankruptcies in May 2024 was 604, which is lower than the numbers over the past 12 months. Bankruptcy numbers have declined since 2009 and fell further during the COVID-19 pandemic. Numbers remain much lower than the long-term (2014 to 2023) monthly average of 1,129.

IVA numbers over the past year have been lower than during 2022, which saw a record high annual number. The 4,946 IVAs (after seasonal adjustment) registered in May 2024 was 19% lower than in May 2023 and 10% lower than in April 2024. In May 2024, there were 3,716 DROs, which is the highest monthly number recorded in the time series dating back to the introduction of DROs in 2009. The number of DROs in May 2024 was 76% higher than the long-term (2014 to 2023) monthly average of 2,114, and 8% higher than April 2024.

There were 7,652 breathing spaces registered under the Debt Respite Scheme in May 2024. This is 14% higher than in May 2023. Of the 7,652 breathing space registrations, 7,547 were Standard breathing space registrations and 105 were Mental Health breathing space registrations. Between the start of the scheme in May 2021 and 31 May 2024, StepChange Debt Charity registered 62% of breathing spaces.

Tim Cooper, President of R3, the UK’s insolvency and restructuring trade body and a Partner at Addleshaw Goddard said “Turning to personal insolvencies, the month-on-month fall in numbers is due to fewer people entering a Bankruptcy and Individual Voluntary Arrangement (IVA) last month, while the annual increase in personal insolvency numbers is due to a rise in Debt Relief Orders after the entry fee for this process was removed in April of this year. Personal insolvency numbers are lower than they were in April 2019, and this is due to fall in Bankruptcies and IVAs.

“The number of people entering a Breathing Space has also increased slightly compared to last month, and it’s clear that there is still ongoing demand for debt support in England and Wales, but that people are increasingly entering processes like DROs that allow them to come to an arrangement with their creditors, or like the Breathing Space, which allows them a respite from creditor pressure while they attempt to find a solution to their financial issues.

“It’s also clear the cost of living is continuing to hit consumers. Paying for the essentials remains a challenge as food, fuel and energy prices continue to rise, and while inflation is coming down and the energy price cap is set to fall from July, costs still remain high for households, with energy prices well above what they were three years ago. As a result, people are still looking to save money – either to meet ongoing costs or to spend later on in the year.”

Steve Vaid, Chief Executive of the Money Advice Trust, the charity that runs National Debtline, said “The record numbers of Debt Relief Orders registered reflects the challenges many are facing in keeping their finances afloat.Experiencing financial difficulty is often stressful, but options like Debt Relief Orders can help remove some of the financial and emotional pressure.

“Even if you are not eligible for a DRO, contacting a free, impartial debt advice service like National Debtline can be the most important step in dealing with your situation.”