Personal insolvencies increased by 14% in 2024

Annual figures from the Insolvency Service for England & Wales have indicated that personal insolvency figures increased by 14% in 2024 to a total of 117,947 when compared to 2023’s total of 103,434.

The number of DROs in 2024 was the highest annual number on record. This followed the removal of the £90 administration fee to obtain a DRO from 6 April 2024 and the expansion of eligibility criteria in June 2024. Bankruptcy numbers were slightly lower in 2024 than in 2023. Numbers in both years were higher than the 40-year low seen in 2022, but remained at less than half of pre-2020 levels.

In 2024, 57% of individual insolvencies were IVAs, 37% were DROs, and 6% were bankruptcies. In 2023, 62% of individual insolvencies were IVAs, 31% were DROs, and 7% were bankruptcies. The long-term trend shows a decrease in the proportion of individual insolvencies that are bankruptcies. Ten years ago, 52% of individual insolvencies were IVAs, 27% were DROs and 21% were bankruptcies.

Analysis of the December figures showed that 10,050 individuals entered insolvency, 23% higher than in December 2023.

The individual insolvencies consisted of 549 bankruptcies, 3,473 DROs and 6,028 IVAs. The number of DROs in December 2024 was 5% lower than in November, continuing a decline from the record high numbers seen between April and September 2024. The number of IVAs registered in December was 10% higher than the average monthly number seen in 2024. Bankruptcy numbers remained at about half of pre-2020 levels and were also lower than in December 2023.

There were 5,650 Breathing Space registrations in December 2024. This is 2% lower than in December 2023.

Commenting on the figures, Tim Cooper, President of R3, the UK’s insolvency and restructuring trade body, and a Partner at Addleshaw Goddard LLP said “Turning to personal insolvencies, numbers have been higher this year than in 2023 and this sadly reflects the ongoing toll the cost of living is taking on people in England and Wales. Financial worries have been a reality for many people for some time as the rising costs of food, energy and inflation mean their money doesn’t go as far as it used to, and the ongoing increases in costs are resulting in more people turning to a personal insolvency process to help resolve their financial issues. With a number of retailers reportedly planning price increases to cover increased outgoings, ongoing inflation, and the Energy Price Cap rising from this month, it’s set to be another hard year for household finances.

“It’s worth noting that the make-up of personal insolvencies has changed over the last two years – and this is mainly a result of changes in legislation. The increase in the DRO threshold and removal of the entry fee this year have meant 2024 was a record year in terms of the number of people entering this process, Individual Voluntary Arrangement numbers have increased compared to last year, and Bankruptcy levels have more than halved from what they were in 2019. A decline in Bankruptcy numbers may seem positive, but the total personal insolvency figures and the high number of people entering a Breathing Space in 2024 show that there continues to be a real and serious issue with personal debt in England and Wales.”