Personal Insolvency Statistics June 2021

 

The Insolvency Services statistics for June 2021 show the number of registrations for insolvency solutions in England and Wales and data for the new government Debt Respite Scheme (Breathing Space), which we reported on here.

What is individual insolvency?

Individual insolvency  – sometimes referred to as personal insolvency – is where an individual is unable to pay back their debts when they are due and their debts outweigh their income and assets. One of the most well known forms of personal insolvency is bankruptcy, but it also includes Individual Voluntary Arrangements (IVAs) and Debt Relief Orders (DROs).

June 2021 insolvency statistics

Individual insolvency statistics for June 2021 in England and Wales were as follows:

• Bankruptcy

  • 735 bankruptcies were registered
  • Bankruptcies were 17% lower than June 2020 and 44% lower than June 2019

• Debt Relief Orders

  • 1,410 Debt Relief Orders were registered
  • DRO numbers were 21% lower than June 2020 and 33% lower than in June 2019 (pre-pandemic)

• Individual Voluntary Arrangements

  • 7,184 average IVAs were registered per month in the three month period ending June 2021
  • IVAs registered was 15% lower than the three month period ending June 2020 but 11% higher than 2019 equivalent

DRO criteria change may show an increase in registrations

There were 1,410 DROs registrations in June 2021, which was 21% lower than June 2020 and 33% lower than June 2019. The criteria changes for DRO eligibility that came into effect on 29 June 2021 were:

• The surplus income level (what is left after paying your bill and everyday expenses) has increased from £50 to £75 per month
• Total debt allowable increases from £20,000 to £30,000
• General asset amount has increased from £1,000 to £2,000
• The value of a car has increased from £1,000 to £2,000 and is treated as separate to general assets

It is too early to see any impact of these changes at present, however we believe that more information will be shown on the next edition due to be released on 17th August. You can read more about the DRO criteria changes update but we predict this number to increase because more people will qualify for a DRO.

Bankruptcy registrations lower

Out of the 735 registered bankruptcies in June 2021, 645 were applications made directly by the individual debtor and 90 by creditor petitions.

Bankruptcies were 17% lower than in June 2020 driven by a drop in debtor applications (21% lower), but creditor petitions were 27% higher. Compared to June 2019, total bankruptcies were 44% lower; debtor applications were 37% lower and creditor petitions were 67% lower.

The Insolvency Service suggest the lower numbers seen from debtor applications for Bankruptcy and DROs likely coincides with support during the coronavirus pandemic. Once this support is withdrawn in Autumn 2021 we could see further applications.

Individual voluntary arrangements

IVA registrations per month were, on average, 7,184 at the end of June 2021. This was 15% lower than the three-month period ending June 2020 and 11% higher than the three-months ending June 2019.

Debt Respite Scheme (Breathing Space) now in full flow

The Debt Respite Scheme was launched on 4th May 2021 and set up by the government to support people struggling with debt, where you can apply for a breathing space period which typically lasts for 60 days.

There is another form of breathing space for those who are suffering from a mental health crisis and are receiving treatment for it. In both instances, the breathing space is a temporary measure whereby borrowers can get protection from creditor enforcement, such as freezing interest and charges during the breathing space.

Between 4 May 2021 and June 30 2021, 11,747 registrations were made, with 11,636 Standard breathing space registrations and 111 Mental Health breathing space registrations.

You can read more about the Debt Respite Scheme in our post here.

Notes on the data

The June 2021 Insolvency Statistics are provided by the Insolvency Service and were released on 16 July 2021. The statistics above relate to to individual insolvencies only for England and Wales. The July 2021 statistics will become available on 17 August 2021. More information about the Insolvency Statistics for June 2021 can be found here.