Personal insolvencies fell to four year low in September

Latest monthly figures from the Insolvency Service for England & Wales have indicated that personal insolvency numbers fell 27% in September 2023 when compared to August last year.

The total number of insolvencies in September 2023 was 7,271, 27% lower than in the same month in the previous year (10,024 in September 2022).

Personal insolvencies consisted of 671 bankruptcies, 2,913 debt relief orders (DROs) and 3,687 individual voluntary arrangements (IVAs). The lower number of personall insolvencies compared to September 2022 was driven by a decline in the number of IVAs.

The bankruptcies were made up of 493 debtor applications and 178 creditor petitions. Bankruptcies were 22% higher than in September 2022. Debtor applications were 14% higher and creditor petitions 53% higher than in September 2022. Bankruptcy numbers in the first nine months of 2023 were slightly higher than in the first nine months of 2022, but remained less than half of pre-2020 levels.

There were 3,687 IVAs registered in September 2023, 52% lower than September 2022. The number of registered IVAs in September 2023 was less than half the number in September 2022, likely in part due to an unusually large number of late registrations of IVAs approved in August and September. Nonetheless, the overall trend is that IVA numbers in 2023 to date have been lower than the record-high numbers in 2022.

There were 7,691 Breathing Space registrations in September 2023, which is 25% higher than the number registered in September 2022. 7,574 were Standard breathing space registrations, which is 24% higher than in September 2022, and 117 were Mental Health breathing space registrations, which is 27% higher than the number in September 2022.

Nicky Fisher, President of R3, the UK’s insolvency and restructuring trade body, said “Personal insolvency numbers hit a four year low in September 2023, and this is down to drop in the number of people entering an Individual Voluntary Arrangement. Bankruptcy and Debt Relief Order (DRO) numbers are at their second highest level this year, which suggests the cost of living crisis is leading more people to seek support via a personal insolvency process – although the increase in the DRO threshold could be a reason why bankruptcy levels have yet to return to pre-pandemic levels.”

“Despite the trend in the figures published today, times remain tough for personal finances. The cost of living, a long succession of interest rate rises and the general health of the economy remain a major worry for many, and people are reluctant to make big purchases as they save money in the run up to Christmas and as they ensure that they have enough to cover the bills.”

“Food and energy costs are a key concern for consumers as we head into the winter months – while the cost of both of these has come down, it still hasn’t returned to pre-2022 levels.”