Personal insolvencies increased by 38.9% in March

Latest quarterly figures from the Insolvency Service for England & Wales have indicated that personal insolvency numbers increased by 38.9% in March 2023 to a total of 11,438 compared to February’s total of 8,237, and decreased by 1% compared to March 2022’s figure of 11,554.

Personal insolvencies increased by 4.4% when compared to March 2021’s total of 10,954 and increased by 46% from March 2020’s total of 7,832. They also decreased by 6.4% compared to pre-pandemic levels in March 2019 (12,216).

There were 3,383 DROs and 672 bankruptcies. The bankruptcies were made up of 565 debtor applications and 107 creditor petitions. Over the past year there has been an average of 563 bankruptcies per month, 60% lower than the 2019 (pre-pandemic) average of 1,395.

Bankruptcies were 2% higher than in March 2022. Debtor applications were 3% higher and creditor petitions were 1% lower than March 2022.

The number of DROs in March 2023 was 35% higher than March 2022. DRO numbers may be volatile at present due to the introduction of new DRO hubs.

There were, on average, 6,100 IVAs registered per month in the three-month period ending March 2023, 14% lower than for the three-month period ending March 2022.

In March 2023 there were 8,282 breathing space registrations. This is 32% higher than the number in March 2022. There were 8,110 Standard breathing space registrations, which is 32% higher than the number in March 2022. There were 172 Mental Health breathing space registrations, which is 41% higher than the number in March 2022.

Commenting on the figures, Christina Fitzgerald, President of R3, the insolvency and restructuring trade body, and a Partner at Edwin Coe LLP said

“While numbers have increased for all personal insolvency processes, the monthly increase has mainly been driven by rises in Individual Voluntary Arrangement and Debt Relief Order numbers.”

“This suggests that the cost-of-living crisis is having an affect on people’s solvency, but that a greater number are coming to an arrangement with their creditors without requiring a bankruptcy process.”

“Many people are concerned about their finances at the moment. As cost-of-living continues to be a serious issue, people are cutting back on discretionary spending and are less likely to make major purchases as they save their money for the basics.”

“With the cost of food and energy continuing to be a concern, people are worried about their finances, inflation and interest rate rises.”

“Consumer borrowing is increasing as more people turn credit to help ease the strain on their finances and with the cost of debt on the rise it is no surprise that last week several UK lenders reported a rise in household defaults.”

“We know how hard it can be to discuss your money worries, but talking about your problem is the first step towards finding a solution and we urge anyone who is worried about money to seek advice as soon as possible.”