21st Jan 2025 11:28
(Alliance News) - The number of people going financially insolvent in England and Wales last year was 14% higher than in 2023, driven by debt relief orders, DROs, jumping to a record high, according to the Insolvency Service.
Some 117,947 personal insolvencies were registered in 2024, 14% higher than the 103,434 recorded in 2023.
Within the total, there were 43,249 DROs – the highest annual number on record and 36% higher than in 2023.
This followed the removal of a GBP90 administration fee to obtain a DRO from April 2024 and the expansion of eligibility criteria in June last year, with the debt threshold being increased from GBP30,000 to GBP50,000.
In 2024, 57% of individual insolvencies were individual voluntary arrangements, IVAs, 37% were DROs, and 6% were bankruptcies.
The Insolvency Service said the long-term trend shows a decrease in the proportion of individual insolvencies that are bankruptcies. Ten years ago, 21% of personal insolvencies were bankruptcies.
Some 10,050 people went financially insolvent in England and Wales in December 2024. This was similar to levels recorded in November 2024, but 23% higher than in December 2023.
In addition to personal insolvencies, 5,650 breathing spaces were registered under the Debt Respite Scheme in December 2024. This was 2% lower than in December 2023.
The scheme allows people with problem debts a period of protection from creditors, giving them time to access professional debt advice.
Meanwhile, the total number of company insolvencies in 2024 in England and Wales was 23,872, 5% lower than in 2023, which at 25,163 was the highest annual total since 1993.
The change in total company insolvency numbers in 2024 was mostly driven by creditors' voluntary liquidations, which were 8% lower than the record high numbers seen in 2023, the Insolvency Service said.
However, compulsory liquidations were at their highest levels since 2014.
The report said: "The total number of registered company insolvencies in 2024 was slightly lower than in 2023 but remained at levels last seen during the 2008-09 recession."
Tim Cooper, president of insolvency & restructuring trade body R3 said: "Compulsory liquidation levels have increased compared to last year as creditors pursue the debts they are owed in an effort to balance their own books."
He added: "From a sectoral perspective, retail, hospitality and construction have all suffered this year.
"All three of these industries have been hit hard by continued rises in expenses, while retail and hospitality have been affected by cautious consumer spending over the past 12 months, and construction by bad weather and the delay to project starts and commissions caused by the general election."
In terms of personal insolvencies, he said: "With a number of retailers reportedly planning price increases to cover increased outgoings, ongoing inflation, and the Energy Price Cap rising from this month, it's set to be another hard year for household finances…
"My message to anyone who is worried about money is to seek advice as soon as possible.
"We've seen countless examples of people and businesses who have come for advice too late and who could have achieved a different – more positive – outcome if they had reached out sooner."
By Vicky Shaw, PA Personal Finance Correspondent
Press Association: Finance
source: PA
Copyright 2025 Alliance News Ltd. All Rights Reserved.