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Insolvency data: "The nation is in the grip of an insolvency crisis"

ended 20. August 2024

This morning at 09:30, the Insolvency Service published the latest individual insolvency data. After seasonal adjustment, 10,524 individuals entered insolvency in England & Wales in July 2024. This was similar to the numbers seen in June 2024 and 24% higher than in July 2023.

Meanwhile,  individual insolvencies consisted of 634 bankruptcies, 4,163 debt relief orders (DROs) and 5,727 individual voluntary arrangements (IVAs). The last four months have all seen the highest monthly numbers of DROs since their introduction. This comes after the removal of the £90 administration fee to obtain a DRO from 6 April 2024 and the expanding eligibility criteria for DROs in June 2024.

The number of IVAs registered in July was similar to June 2024 and 12% higher than in July 2023. Bankruptcy numbers remained at about half of pre-2020 levels, but similar levels to those seen in the past 12 months.

In the 12 months ending 31 July 2024, one in 442 adults in England & Wales entered insolvency (a rate of 22.6 per 10,000 adults). This is lower than the rate of 23.3 per 10,000 adults (1 in 429) who entered insolvency in the 12 months ending 31 July 2023. There were 7,369 Breathing Space registrations in July 2024. This is 5% lower than in July 2023.

Newspage asked experts for their views below.

7 responses from the Newspage community

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Darryl Dhoffer
Founder at The Mortgage Geezer
The nation is in the grip of an insolvency crisis. Quite simply, soaring insolvency rates are devastating lives. Roughly 10,000 people in England and Wales became insolvent in July alone, a stark symptom of the ongoing cost-of-living crisis and higher interest rates. The surge in DROs reflects desperation as people drown in debt. While bankruptcies are lower than pre-pandemic, the overall picture is grim. One in 442 adults entered insolvency in a year, a national tragedy demanding urgent action. As winter looms, the government must provide a lifeline to prevent a deepening crisis.
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Rohit Kohli
Director at The Mortgage Stop
Sadly, once people get into trouble they end up in a circle of doom and despair as, despite what many lenders say, when you start to struggle to make your payments many people find doors being slammed shut to options that could help them. We have had conversations with some clients who have had an impeccable record for 20+ years, but when the pandemic hit, they lost their income and, when combined with interest rate rises, they found themselves unable to maintain their payments. The lenders they had been loyal to for so long, suddenly appeared to not want to know and just wanted their money back. Anyone who lends money should have a duty of care placed on them and more should be done to regulate how that duty of care is put into practice. Capped interest charges, extended loan terms, longer interest-only servicing periods and equity in lieu of payments should all be on the table in extreme circumstances.
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Patricia McGirr
Founder at Repossession Rescue Network
It's all sympathy and no strategy from most institutions as far as workable options go for people in distress. The cost-of-living crisis, skyrocketing interest rates and mountains of unsecured debt have created a perfect storm with no safe harbour in sight for those caught up in the swell. Repayment plans often feel like a noose tightening around those already struggling to breathe, pushing bankruptcy as the only escape; a so-called "solution" that leaves lives in tatters. And let’s not be fooled by talk of base rate reductions: they’re meaningless to those who can’t access preferential rates. The reality is, fees pile on top of debt, trapping people in a relentless cycle of financial despair. The human toll is immense. Debt and mental health are inseparable, yet this critical connection is rarely addressed. We need debt solutions that fit today's reality, not platitudes.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
For individual insolvencies to be almost a quarter higher than they were last year shows the immense pressure households are under. The recent mild relief from the reduction to the Bank of England base rate will be too little, too late for many individuals and businesses. The insolvency data is bleak and the fear is that we are still only seeing the tip of the iceberg. After the cost of living crisis, and with interest rates much higher than they were a few years ago, many households are on the brink. Sadly, many businesses are, too.
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Michelle Lawson
Director at Lawson Financial
We know these figures will never be zero but there are still people and businesses struggling. As much as the figures for the DRO's are worrying, it would appear that people are possibly considering their options and taking advice when in difficulty. Removing the fees will help with this but the appropriate advice should be sought before making such decisions which can affect the rest of your life. These vulnerable individuals are then often financially impacted further and the downward spiral starts and continues. More should be done to drill down why this is happening and try and help these people more.
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Ben Perks
Managing Director at Orchard Financial Advisers
Once again, the insolvency data serves as a stark reminder that we are not out of the woods yet. Until the Cost of Living Crisis starts to truly wane and interest rates reduce to slightly more tolerable levels, we will continue to see increases. Sad times for the individuals and families involved and I hope that they sought advice and acted early to limit any long-term financial suffering.
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Hannah Bashford
Director at Model Financial Solutions
Insolvency data always makes for bleak reading and this latest chapter is no different. These grim figures confirm that even though rates are reducing, it’s too little too late for many households. This should give the Bank of England pause for thought when the Monetary Policy Committee next meets.