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The number of individuals entering a personal insolvency procedure was up 8% in Q1 2024, the first successive rise since Q4 2021, according to new figures released by the Insolvency Service.
Whilst bankruptcy and debt relief order (DRO) numbers remained relatively consistent when compared to the previous quarter, IVA registrations in the quarter rose by 18%, fuelling the overall increase in personal insolvency numbers.
The seasonally adjusted figures reveal that there were 26,933 individuals entering either bankruptcy (2,158), DRO (8,428) or IVA (16,347) in Q1 2024. IVA registrations were up on the previous quarter, although when compared to Q1 2023, there was a 16% drop in registrations.
After five successive quarterly increases in DRO numbers, DROs decreased by 7% on the previous quarter. Despite this, the 8,428 registrations in the period still represented a 20% increase on the same quarter in 2023.
Bankruptcy numbers rose by 7% in the quarter and 22% when compared to Q1 2023.
Andy Nalliah, personal insolvency partner at RSM UK said: “Despite the slight dip in debt relief orders, overall, they remain strong. We anticipate this to continue into Q2 and almost certainly beyond June 2024 when consumer access to DROs will improve as entry thresholds for debt levels and assets rise, and the entry fee is abolished.
“Despite the quarter-on-quarter increase in individual voluntary arrangement registrations, total registrations saw a 16% drop from the same quarter in 2023 and further suggests the numbers seen in the post-Covid era have now plateaued. We do not expect to see any significant increases in registrations any time soon, as it is anticipated many consumers will opt for a debt relief order as they become more accessible when the entry thresholds increase.”
Nalliah continued: “Quarterly bankruptcy numbers exceeded 2,000 for the third quarter running, with creditor petitions remaining high and accounting for 19% of the bankruptcies in the quarter. This aligns with the revised attitudes of creditors whose collective approach may now be less sympathetic to debtors, and increasingly proactive in debt recovery and enforcement than we have seen in recent years.”
