According to the latest data from the Insolvency Service for England & Wales, the number of personal insolvencies witnessed a notable decline of 19% in March 2024, marking a significant improvement in the financial landscape. With a total of 8,708 personal insolvencies registered, this figure represents a 19% decrease compared to February 2024 and a 9% decrease compared to March 2023.

The breakdown of these insolvencies includes 681 bankruptcies, 2,628 debt relief orders (DROs), and 5,399 individual voluntary arrangements (IVAs). While the number of IVAs remained consistent with the figures observed over the past year, DRO numbers saw a slight decrease from the record high monthly numbers witnessed in the latter half of 2023. However, they remained elevated compared to historical levels. Meanwhile, bankruptcy numbers remained relatively steady, aligning with trends observed over the past nine months.

It’s worth noting that personal insolvency numbers peaked in 2009 and 2010 following the recession, before gradually decreasing over the subsequent years. The increase in IVAs between 2015 and 2019 led to a corresponding rise in overall insolvency numbers. However, during the COVID-19 pandemic, the numbers of bankruptcies and DROs decreased, and the growth in IVAs slowed, resulting in lower overall individual insolvency numbers between 2020 and 2022 compared to 2019.

The decline in IVA numbers in 2023 coincided with regulatory changes, including a ban on debt packagers receiving remuneration for referrals to IVA firms and the adoption of a new Statement of Insolvency Practice. Conversely, DRO numbers saw an increase following the expansion of eligibility criteria and the establishment of new DRO hubs. Although bankruptcy numbers increased in 2023 from the low observed in 2022, they remained significantly lower than pre-2020 levels.

Additionally, the Debt Respite Scheme registered 7,710 breathing spaces in March 2024, indicating a 7% decrease compared to March 2023. Despite this decline, many individuals continue to utilize this process to seek advice and address their financial challenges.

Tim Cooper, President of R3, highlighted that while the decrease in personal insolvencies is a positive development, challenges such as the cost of living crisis and rising basic expenses persist. He emphasized the importance of addressing financial concerns and the need for continued support for individuals navigating these challenges.

Andy Nalliah, Personal Insolvency Partner at RSM UK, echoed similar sentiments, noting the strength of debt relief orders and anticipating their continued relevance in the coming quarters. He also emphasized the importance of creditor attitudes in shaping insolvency trends and highlighted the need for proactive measures in debt recovery and enforcement.

In conclusion, while the decline in personal insolvencies is a welcome trend, ongoing economic uncertainties necessitate sustained efforts to support individuals in managing their finances and navigating potential challenges ahead.

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Last Update: April 29, 2024