Personal insolvencies increase by 20%

Latest quarterly figures from the Insolvency Service for England & Wales have indicated that personal insolvency numbers increased by 20% in February 2023 from February 2021’s total of 6,839 and decreased by 4.4% from February 2020’s total of 8,590.

Personal insolvencies also increased by 5.9% in February 2023 to a total of 8,210 when compared to January’s total of 7,750, and decreased by 16.5% compared to February 2022’s figure of 9,838.

The insolvencies comprised of 580 bankruptcies, which was 3% lower than in February 2022, and 63% lower than February 2020. The bankruptcies were made up of 486 debtor applications and 94 creditor petitions

There were 2,083 Debt Relief Orders (DROs) in February 2023, which was 7% lower than February 2022 and 13% lower than the pre-pandemic comparison month (February 2020). 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, 5,627 Individual Voluntary Arrangements (IVAs) registered per month in the three-month period ending February 2023, which is 12% lower than the three-month period ending February 2022, but similar to the three-month period ending February 2020.

There were 7,312 Breathing Space registrations in February 2023, which is 26% higher than the number registered in February 2022. 7,173 were Standard breathing space registrations, which is 26% higher than in February 2022, and 139 were Mental Health breathing space registrations, which is 58% higher than the number in February 2022.

Nicky Fisher, Vice President of R3 said  “When it comes to personal insolvencies, the figures published today are higher than January’s, and this is due to an increase in the number of people entering an Individual Voluntary Arrangement or a Debt Relief Order.”

“It’s also worth noting that the personal insolvency figures published today are higher than the ones for February 2020 and 2019, although they are lower than February 2022’s.”

“Money worries are a reality for many people at the moment. Inflation continues to take its toll, and whilst the winter may have been weathered by many, the squeeze on household finances continues to weigh heavy on people’s minds.”

“Many households may have relied on savings or low-level credit to help them absorb high inflation, but with energy and food prices unlikely to fall to pre-2022 inflation levels in the next two or three years, pressure on personal finances will remain a concern for many.”

“It can only take one financial shock – a missed payment, reduction in hours at work or illness – to mean people whose finances are tight become insolvent, as debts they were struggling with but managing to pay become unpayable.”