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Charts analysing insolvency statistics

What Do The Latest Insolvency Statistics Tell Us?

The Insolvency Service releases monthly and quarterly insolvency statistics for both individuals and companies. The Monthly Insolvency Statistics are released as provisional experimental statistics and are published two weeks in arrears of month end, in order to provide faster indicators of the impact of the pandemic on insolvency. The figures released include both company and individual insolvencies including, the number of Bankruptcies, Debt Relief Orders (DROs) and Individual Voluntary Arrangements (IVAs) registered in the month.

Since the first UK lockdown in March 2020, the overall number of company as well as individual insolvencies are lower when compared to pre-pandemic levels. This is mainly due to the measures put in place by the government to support businesses and individuals during the pandemic and lockdown. Let’s dig into the numbers…

The Individual Insolvency Statistics for Q2 of 2021

For many people, the past year has been incredibly tough, and our Debt Movement team has been hard at work assisting as many as possible with debt guidance and solutions. But digging into the stats for individual insolvencies reveals some interesting insights. In terms of the numbers there were a total of 27,662 individual insolvencies registered:

  • 2,385 Bankruptcies
  • 4,367 DROs
  • 20,910 IVAs

While these figures are still high, our expectations for all categories were much higher. To give some perspective, individual insolvencies in Q2 2021 decreased by 4% from Q1 2021 and were 14% lower when compared to Q2 2020.

Bankruptcies

The number of bankruptcies in Q2 2021 decreased by 9% from the previous quarter and were 7% lower than during the same quarter last year. The number of bankruptcies was the lowest since Q1 1990.

Bankruptcies consisted of:

  • 2,122 debtors’ applications, which was 8% lower than Q1 2021 and 12% lower than Q2 2020
  • 274 creditors’ petitions, which was 7% lower than Q1 2021 and 55% higher than Q2 2020 

Debt Relief Orders (DROs)

The number of DROs increased by 5% in Q2 2021 when compared to the previous quarter, but were 9% lower than the same quarter last year. During the COVID-19 pandemic, the numbers of DROs have been relatively low, with Q2 2021 seeing the third-fewest DROs in any quarter since the quarter they were introduced (Q2 2009), with only Q4 2020 and Q1 2021 being lower.

Given the recent change in eligibility criteria it is anticipated that the number of DRO applications will start to increase.

Individual Voluntary Arrangements (IVAs)

When comparing the IVAs for Q1 2021 to the same period last year, there has been a 5% decrease from Q1 2021 and a decrease of 16% from Q2 2020.

The Insolvency Service has, however, urged caution when interpreting these numbers because IVAs are only considered in these statistics once they are registered with the Insolvency Service and are reported by quarter of registration.

Breathing Space

On 4 May 2021 the government launched Breathing Space, to alleviate the seemingly overwhelming pressure and stress of being over-indebted or financially stretched, by allowing debtors a little time to rebuild their finances, while also seeking debt advice and/or mental health crisis treatment. From 4 May 2021 until 30 June 2021 there were 11,747 breathing space registrations. These are composed of 11,636 standard breathing space registrations and 111 mental health crisis breathing space registrations (for those receiving mental health crisis treatment).

Whilst it is not recorded whether an insolvency is directly related to the coronavirus pandemic, it is likely that it is, because of the measures put in place by the government to support business and individuals over the last 12-18 months.

With some measures coming to an end shortly, it is expected that both company and individual insolvencies will start to increase.

At Debt Movement, we have already helped over 35,000 people overcome their financial difficulties, guiding them on the path to becoming financially free. If you are struggling with your debt, our friendly, non-judgemental guides are ready to assist you with a solution that is right for you. Please request a free callback and start your journey to financial freedom.

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