Personal insolvencies fall by 7.4%

Latest quarterly figures from the Insolvency Service for England & Wales have indicated that personal insolvency numbers decrease by 7.4% in January 2023.

The personal insolvency figures of 8,344 were 8.9% lower than January 2022’s figure of 8,485. There were  612 bankruptcies were registered, which were 5% higher than in January 2022, but 60% lower than January 2020.

There were 1,741 Debt Relief Orders (DROs) in January 2023, which was 7% lower than January 2022 and 21% lower than the pre-pandemic comparison month (January 2020). The number of DROs in January 2023 was 21% lower than in January 2020 and 7% lower than January 2022. DRO numbers increased following an eligibility change in June 2021 and for the past year have been slightly lower than pre-pandemic levels.

There were, on average, 6,328 Individual Voluntary Arrangements (IVAs) registered per month in the three-month period ending January 2023, which is 1% higher than the three-month period ending January 2022, and 6% higher than the three-month period ending January 2020.

The bankruptcies were made up of 518 debtor applications and 94 creditor petitions. Monthly bankruptcy numbers over the past 18 months were lower than the numbers in 2020, which were already lower than pre-pandemic levels. Bankruptcies were 5% higher than in January 2022. Debtor applications were 2% higher and creditor petitions were 21% higher than January 2022.

Compared to January 2020, total bankruptcies were 60% lower; debtor applications were 60% lower and creditor petitions were 61% lower.

Christina Fitzgerald, President of R3, the insolvency and restructuring trade body, and a Partner at Edwin Coe LLP said “The fall in personal insolvencies is a result of a drop in the number of people entering a Debt Relief Order and an Individual Voluntary Arrangement (IVA). It’s important to note that some IVA numbers for the last two days of January haven’t been included in this month’s figures, so the true picture of personal insolvencies in England and Wales for January isn’t yet available.”

“However, it’s worth noting that while bankruptcy numbers have increased monthly and yearly, they are still well below 2020 and 2019 levels. This suggests that while more people have entered a bankruptcy than last month, the cost-of-living crisis isn’t translating into an increase in the number of people needing this process to resolve their financial distress.”

“Despite this, money worries are still front of mind for many people in England and Wales, and as costs rise and wages continue to lag behind inflation, people are watching their outgoings like hawks.”

“Heating, eating and travelling are continuing to become more expensive, and there are a lot of people who are worried about their bills, their financial futures, and the economy and are cutting their costs wherever they can as a result.”