Individual insolvencies in UK shrink 9% in Q1 2023

There were 29,017 individual insolvencies registered in the UK in Q1 2023, which was 2% lower than the number of individual insolvencies registered in the previous quarter and 9% lower than the same quarter in the previous year.

The Insolvency Service of the UK has released its latest statistics for individual insolvencies, including bankruptcies, individual voluntary arrangements (IVAs), and debt relief orders (DROs) for Q1 2023.

Individual Voluntary Arrangements (IVAs)

IVAs were the most common individual insolvency procedure, accounting for 70% of cases, followed by DROs (24%) and bankruptcies (6%). IVAs made up a larger proportion of individual insolvencies than in the past, while bankruptcies constituted a much smaller proportion. Five years ago, IVAs made up 61% of individual insolvencies, compared to 24% for DROs and 15% for bankruptcies. Ten years ago, 48% of individual insolvencies were IVAs, compared to 27% for DROs and 24% for bankruptcies.

After seasonal adjustment, the number of IVAs registered in Q1 2023 decreased by 7% from the previous quarter and was 15% lower than in Q1 2022. However, it’s worth noting that caution should be applied when interpreting the IVA numbers. The statistics count IVAs once they’re registered with the Insolvency Service by licensed insolvency practitioners. A time lag can occur between the acceptance of the IVA and its registration. Changes in the number of registered IVAs may partly reflect changes in how insolvency practitioner firms operate.

Debt Relief Orders

In Q1 2023, the number of DROs increased by 13% compared to the previous quarter and 8% compared to the same quarter last year. This rise in DROs may be affected by the opening of new DRO hubs.

After seasonal adjustment, the number of bankruptcies registered in Q1 2023 increased by 7% from the previous quarter and by 4% from the same quarter last year. The number of bankruptcies consisted of 1,449 debtors’ applications, which was 11% higher than in Q4 2022 and 1% higher than in Q1 2022, and 323 creditors’ petitions, which was 15% higher than in Q4 2022 and 23% higher than in Q1 2022. In Q1 2023, 82% of bankruptcies resulted from debtor applications, which is lower than the proportion seen in previous quarters during the COVID-19 pandemic (around 90%) but is similar to pre-pandemic levels of 75-85%. The number of creditor petitions in Q1 2023 was the highest since the beginning of the pandemic, while debtors’ applications remained lower than 2021 levels.

The report also shows that there were 23,179 Breathing Space registrations in Q1 2023, which was 34% higher than in Q1 2022. Of the 23,179 Breathing Space registrations, 22,770 were Standard breathing space registrations, and 409 were Mental Health breathing space registrations.

The individual insolvency rate was 24.5 per 10,000 adults in England and Wales in the four quarters ending Q1 2023. This corresponds to one in 408 adults having become insolvent in the 12 months ending March 31, 2023. Insolvency rates are calculated as a proportion of the adult population and are more comparable over longer time periods than the absolute numbers. The rates presented for each quarter reflect a four-quarter rolling rate per

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