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Individual insolvencies up by 15%: "This is not a warning. It is the bill arriving"

ended 20. January 2026

INDIVIDUAL insolvencies is up by 15% as experts say "this is not a warning. It is the bill arriving".

In December 2025, 13,453 individual insolvencies were registered in England and Wales, new data shows. 

The government said this number was affected by a temporary backlog.

But the total number of individual insolvencies for November and December 2025 was 15% higher than the equivalent two months of 2024.

The individual insolvencies consisted of 601 bankruptcies, 4,150 debt relief orders (DROs) and 8,702 individual voluntary arrangements (IVAs). 

DRO numbers in December 2025 were slightly lower than the record high seen in August 2025. Numbers of IVAs in November and December were also affected by a temporary backlog.

But the total number of registered IVAs for November 2025 and December 2025 was 18% higher than the equivalent two months of 2024. 

Bankruptcy numbers remained at about half of pre-2020 levels but were 4% higher than in December 2024.

Patricia McGirr, Founder at Burnley-based Repossession Rescue Network, said the UK economy is making many struggle.

She added: "This is not a warning. It is the bill arriving. A 15% rise in personal insolvencies tells you households have already run out of options. Spending has been cut, savings are gone, and credit is being used to hold life together, not to get ahead. 

“The growth in IVAs and debt relief orders shows people are not reckless. They are buying time. Low bankruptcy numbers do not signal stability. They signal fear of the fallout and a desperate attempt to avoid total collapse. This is an economy that balances on spreadsheets while failing in real homes. Ignore this and the economy does not just weaken. Society does.”

Samuel Mather-Holgate, Managing Director & IFA at Swindon-based Mather and Murray Financial, said small businesses are affected too.

He continued: “It’s no surprise that the more pressure Labour and Reeves pile upon small businesses, there will be more of them going pop. 

"Tax rises, red tape and increases to costs like the national living wage have made it more difficult to remain in business.”

Rohit Parmar-Mistry, Founder at Burton-on-Trent-based Pattrn Data, said something radical needs to happen to change the direction for many.

He added: "The government is quick to blame a 'temporary backlog' for these figures. As someone who works in tech, I know a data glitch when I see one, but a 15% year-on-year rise isn’t a glitch. It’s a trend. You can backlog the paperwork, but you can’t backlog the misery of 13,453 people hitting the financial wall in a single month. 

"This data screams that the UK economy is still broken for the working majority. The near-record levels of Debt Relief Orders (DROs) are the 'insolvencies of despair', people with no assets and low income who literally cannot afford to live. While we obsess over AI stock bubbles and macroeconomic tweaks, real human beings are drowning. 

“The solution isn't just better debt advice, it's fundamental economic repair. We need to stop obsessing over 'growth' metrics that don't reach the kitchen table and start focusing on real wage security. Right now, we are building better systems to process bankruptcy while failing to build an economy that prevents it." 

Colette Mason, Author & AI Consultant at London-based Clever Clogs AI, said the rising cost of living is biting.

He continued: “This is a stark indicator of broader economic strain. It signals something much deeper and more entrenched than a 'backlog'. The UK economy is becoming increasingly dependent on short-term fixes like debt relief orders and IVAs, while households grapple with a rising cost of living. 

"What we need is a comprehensive, long-term strategy that focuses on boosting productivity and providing tangible support for struggling businesses and households alike. It's time for a full rethink of how we manage debt and financial resilience. 

"The government needs to focus on providing more robust support for those facing financial hardship, with less reliance on stopgap solutions. This isn't just a financial issue. It's a structural challenge that requires all policymakers, in both the public and private sectors, to act with urgency and coherence.”

4 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Managing Director & IFA at Mather and Murray Financial
It’s no surprise that the more pressure Labour and Reeves pile upon small businesses will result in more of them going pop. Tax rises, red tape and increases to costs like the national living wage have made it more difficult to remain in business.
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Patricia McGirr
Founder at Repossession Rescue Network
This is not a warning. It is the bill arriving. A 15 percent rise in personal insolvencies tells you households have already run out of options. Spending has been cut, savings are gone, and credit is being used to hold life together, not to get ahead. The growth in IVAs and debt relief orders shows people are not reckless. They are buying time. Low bankruptcy numbers do not signal stability. They signal fear of the fallout and a desperate attempt to avoid total collapse. This is an economy that balances on spreadsheets while failing in real homes. Ignore this and the economy does not just weaken. Society does.
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Rohit Parmar-Mistry
Founder at Pattrn Data
The government is quick to blame a 'temporary backlog' for these figures. As someone who works in tech, I know a data glitch when I see one, but a 15% year-on-year rise isn’t a glitch. It’s a trend. You can backlog the paperwork, but you can’t backlog the misery of 13,453 people hitting the financial wall in a single month.

This data screams that the UK economy is still broken for the working majority. The near-record levels of Debt Relief Orders (DROs) are the 'insolvencies of despair', people with no assets and low income who literally cannot afford to live. While we obsess over AI stock bubbles and macroeconomic tweaks, real human beings are drowning.

The solution isn't just better debt advice; it's fundamental economic repair. We need to stop obsessing over 'growth' metrics that don't reach the kitchen table and start focusing on real wage security. Right now, we are building better systems to process bankruptcy while failing to build an economy that prevents it.
Copy

Colette Mason
AI Ethics Consultant at Clever Clogs AI
From an economic viewpoint, this isn’t just a financial crisis; it’s a structural collapse. The rising number of insolvencies shows that more people are on the brink, relying on solutions that merely delay the inevitable. Band-aid fixes like DROs and IVAs fail to address the root causes of debt: stagnant wages, rising costs, and the inability to save in an environment of low growth. We must rethink how we manage personal finances, not only for individuals, but for the economy overall. Ignoring the systemic nature of the issue will only push more into financial hardship.

More government support for those in debt, and less focus on short-term solutions, will help. This isn’t just a financial sector issue. It’s a call to action for all policymakers, public and private. The goal is to align both economic growth strategies and ethical considerations, ensuring the financial system works for those who need it most, not just for those who can navigate debt management complexities.