Latest quarterly figures from the Insolvency Service for England & Wales have indicated that personal insolvency numbers increased by 29%, when compared ro June 2022 with 643 bankruptcies registered.
There were 2,320 Debt Relief Orders (DROs), which was 21% higher than June 2022. There were, on average, 6,026 Individual Voluntary Arrangements (IVAs) registered per month in the three-month period ending June 2023, which is 22% lower than the three-month period ending June 2022. IVA numbers in the first half of 2023 were lower than in the first half of 2022.
The bankruptcies were made up of 521 debtor applications and 122 creditor petitions. Bankruptcies were 29% higher than in June 2022. Debtor applications were 27% higher and creditor petitions were 36% higher than June 2022. Bankruptcy numbers in the first half of 2023 were slightly higher than in the first half of 2022, but remained less than half of pre-2020 levels.
In June 2023 there were 7,936 breathing space registrations. This is 37% higher than the number in June 2022. Of the 7,936 Breathing Space registrations in June 2023: There were 7,825 Standard breathing space registrations, which is 38% higher than the number in June 2022. There were 111 Mental Health breathing space registrations, which is 31% higher than the number in June 2022.
Personal insolvencies decreased by 18.7% in June 2023 to a total of 8,119 compared to May’s total of 9,990, and decreased by 22.9% compared to June 2022’s figure of 10,534. Personal insolvencies decreased by 17.6% from June 2021’s total of 9,852, decreased by 2% from June 2020’s total of 8,282, and decreased by 16.5% compared to pre-pandemic levels in June 2019 (9,722).
Nicky Fisher, President of R3, the UK’s insolvency and restructuring trade body said “Turning to personal insolvencies, the monthly fall is driven by a reduction in all types of personal insolvency process, but the financial picture is still a difficult one for many in England and Wales.”
“People are worried about the economy and reluctant to spend on anything more than the essentials. The cost of living and concerns about job security are front of mind for many, and with wages failing to keep pace with inflation households are tightening their purse-strings.”
“Personal debt and credit card debt have both increased, and credit cards are increasingly being used to pay for basics like food shopping. It’s understandable why people would do this, but it isn’t a sustainable or sensible move, so I suggest anyone in this position looks at their outgoings and sees where they could make changes – especially as rising interest rates are going to increase the costs of borrowing.”
Jane Tully, Director of External Affairs and Partnerships at the Money Advice Trust said “Today’s figures are reflective of the impact that high costs are having for struggling households. Debt Relief Orders provide a vital route out of debt for people experiencing financial difficulty, while Breathing Space gives people who have fallen behind on repayments a much-needed pause on creditor action while they seek advice for their debts.”
“Nevertheless, these figures are a worrying sign of households under strain, with more people facing little option but to seek a solution for their debts.Insolvency options should not be undertaken lightly and it is crucial that people receive free, impartial debt advice before deciding the best course of action to take.”