Credit, Collections & Insolvency News
Latest monthly figures from the Insolvency Service for England & Wales have indicated that personal insolvency figures increased by 9.9% in April 2024 with a total of 9,651 personal insolvencies registered. Personal insolvencies increased by 4.7% when compared to April 2023’s figure of 9,222.
The personal insolvencies consisted of 648 bankruptcies, 3,436 debt relief orders (DROs) and 5,567 individual voluntary arrangements (IVAs).
The number of IVAs registered in April was similar to numbers seen over the past 12 months. The number of DROs in April 2024 was a record high in the monthly time series going back to their introduction in 2009. This coincided with the removal of the £90 administration fee to obtain a DRO from 6 April 2024. The number of bankruptcies was similar to the past nine months and slightly higher than in April 2023. However, bankruptcy numbers remained at about half of pre-2020 levels.
There were 3,436 DROs, which is the highest monthly number recorded in the time series which goes back to the introduction of DROs in 2009, 63% higher than the long-term (2014 to 2023) monthly average of 2,114. Following an announcement on 6 March 2024, the £90 administration fee to obtain a DRO was abolished on 6th April 2024.
The number of bankruptcies in April 2024 was 648, this is similar to numbers over the past nine months. Bankruptcy numbers have declined since 2009 and fell further during the COVID-19 pandemic. Numbers remain much lower than the long-term (2014 to 2023) monthly average of 1,129.
There were 7,649 breathing spaces registered under the Debt Respite Scheme in April 2024. This is 16% higher than in April 2023. Of the 7,649 breathing space registrations, 7,547 were Standard breathing space registrations and 102 were Mental Health breathing space registrations. Between the start of the scheme in May 2021 and 30 April 2024, StepChange Debt Charity registered 62% of breathing spaces.
Tim Cooper, President of R3, the UK’s insolvency and restructuring trade body, and a Partner at Addleshaw Goddard said “Turning to personal insolvencies, the key factor behind the month-on-month and year-on-year increase has been a rise in the number of Debt Relief Orders – a trend which was expected after the Chancellor announced he was removing the administration fee from the start of April.
“Breathing Space numbers have fallen compared to last month, but are still higher than they were in April 2023 and 2022. When this is considered alongside the numbers for the other personal insolvency processes, it’s clear that a significant number of people are in need of either debt advice, or debt solutions. Based on the figures, it seems the majority of these people are choosing to either seek protection from creditor action while they explore their options, or enter processes that enable them to come to an arrangement with their creditors when it comes to repaying their debts.
“It’s also very clear the cost-of-living crisis is still taking a toll on people’s finances. Prices are continuing to rise despite the fall in inflation, and we’re hearing reports of people turning to credit to bridge the gaps in their finances. Despite these issues, the mood among consumers is becoming more positive – people seem more optimistic about their personal finances over the next year, although it’s worth noting that the future of the economy, the cost of living and concerns around job security remain key areas of concern.”