National statistics

Commentary - Individual Insolvency Statistics July to September 2023

Published 31 October 2023

Released

31 October 2023

Next release

30 January 2024

Media enquiries

press.office@insolvency.gov.uk

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Statistical enquiries

Thomas Evans (author)

statistics@insolvency.gov.uk

David Webster (responsible statistician)

1. Main messages for England and Wales

• After seasonal adjustment, the number of individual insolvencies in July to September (Q3) 2023 was 6% lower than in Q2 2023. The number of debt relief orders (DROs) was the highest quarterly number since their introduction in 2009. Bankruptcies also increased, but individual voluntary arrangements (IVAs) were lower. The total number of individual insolvencies was 15% lower than in Q3 2022.
• One in 441 adults (at a rate of 22.7 per 10,000 adults) entered insolvency between 1 October 2022 and 30 September 2023. This is a decrease from the 24.7 per 10,000 adults who entered insolvency in the 12 months ending 30 September 2022.
• There were 23,089 Breathing Space registrations in Q3 2023. This is 26% higher than in Q3 2022. Of the 23,089 Breathing Space registrations, 22,722 were Standard Breathing Space registrations and 367 were Mental Health Breathing Space registrations.

Figure 1: Individual insolvencies in Q3 2023 were lower than in both Q2 2023 and Q3 2022.

England and Wales, Q3 2003 to Q3 2023, seasonally adjusted

Source: Insolvency Service

The long-term series back to Q1 1984 (where applicable) can be found in the CSV file that accompanies this release.

While there has been a long-term decline in bankruptcy numbers, the first three quarters of 2023 saw a slight increase from the 40-year low annual number in 2022. DRO numbers increased in Q3 2023 to the highest quarterly level since their introduction in 2009. IVA numbers continued to decline, although lower numbers in Q3 2023 were partly caused by delays to the Insolvency Service being notified of some IVAs approved in August and the first half of September.

2. Things you need to know about this release

This statistics release contains the latest data on individual insolvency in the UK, presenting the numbers of individuals who have entered a formal insolvency procedure after being unable to pay their debts. Information is presented separately for England and Wales, Scotland and Northern Ireland.

The Insolvency Service separately publishes monthly statistics to provide more up to date information on the numbers of company and individual insolvencies during this time of economic uncertainty. However, they have not replaced the quarterly National Statistics, since the information presented on a monthly basis is less granular and is less reliable for monitoring changes in trends over time. Following a consultation in 2023, the Insolvency Service will merge the monthly and quarterly statistics while maintaining monthly frequency. The first release in the new format will be published in April 2024.

Underlying data for these quarterly statistics for England and Wales were adjusted where there was evidence of seasonality, to account for variation in individual insolvencies across the year and allow for comparison to the most recent period within years. Data for Scotland and Northern Ireland were not adjusted. The seasonal adjustment models are reviewed on an annual basis. In accordance with the outcome of the April 2023 Seasonal Adjustment Review, bankruptcies, DROs and IVAs were all seasonally adjusted.

The number of breathing space registrations under the Debt Respite Scheme are included in these statistics. Individuals that register for breathing space may or may not end up entering a formal insolvency procedure. Those that do enter a formal insolvency procedure will be counted accordingly in Tables 1 to 5 of the accompanying tables.

Quarters referred to in this publication are calendar year quarters, such that Q3 2023 is the period from 1 July to 30 September 2023.

2.1 Designation as National Statistics

These accredited official statistics were independently reviewed by the Office for Statistics Regulation in July 2019. They comply with the standards of trustworthiness, quality and value in the Code of Practice for Statistics

Our statistical practice is regulated by the Office for Statistics Regulation (OSR).

OSR sets the standards of trustworthiness, quality and value in the Code of Practice for Statistics that all producers of official statistics should adhere to.

You are welcome to contact us directly with any comments about how we meet these standards.

Alternatively, you can contact OSR by emailing regulation@statistics.gov.uk or via the OSR website.

3. Individual insolvency in England and Wales

3.1 Numbers of individual insolvencies

After seasonal adjustment, there were 24,418 individual insolvencies registered in Q3 2023, 6% lower than the number of individual insolvencies registered in the previous quarter, and 15% lower than during the same quarter in the previous year.

Individual voluntary arrangements (IVAs) were the most common individual insolvency procedure (57% of cases), followed by DROs (35% of cases) and bankruptcies (8% of cases).

IVAs in Q3 2023 made up a smaller proportion of individual insolvencies than 2 years ago. In Q3 2021, 72% of individual insolvencies were IVAs. This is driven by both a fall in IVA numbers and an increase in DROs. However, the proportion of insolvencies that were IVAs remained higher than 10 years ago, when 49% of individual insolvencies were IVAs. This reflects the long-term decline in bankruptcy numbers compared to IVAs.

Unlike the monthly statistics, quarterly statistics are seasonally adjusted to account for seasonal variation in insolvencies across the year and allow for comparison to the most recent period within years.

Table 1: The number of IVAs was lower in Q3 2023 than Q2 2023, while numbers of bankruptcies and DROs were higher than last quarter.

England and Wales, Q3 2022 to Q3 2023, seasonally adjusted

	Total individual insolvencies	Bankruptcies	Debt relief orders	Individual voluntary arrangements
2022Q3	28,878	1,712	5,680	21,486
2022Q4	29,302	1,616	6,178	21,508
2023Q1	28,321	1,764	7,057	19,500
2023Q2	25,957	1,872	7,174	16,911
2023Q3	24,418	2,015	8,438	13,965
Percentage change, latest quarter (Q3 2023) compared with:
vs 2023Q2	-6%	8%	18%	-17%
vs 2022Q3	-15%	18%	49%	-35%

Source: Insolvency Service

The long-term series back to Q1 1984 (where applicable) can be found in the CSV file that accompanies this release.

IVAs

After seasonal adjustment, the number of IVAs registered in Q3 2023 decreased by 17% from the previous quarter, and was 35% lower than in Q3 2022. The number of IVAs in Q3 2023 was the lowest since Q3 2020. This is likely in part due to an unusually large number of late registrations of IVAs approved in August and September. Nonetheless, the overall trend is that IVA numbers in 2023 to date have been lower than the record-high numbers in 2022

Caution needs to be applied when interpreting the IVA numbers. IVAs are counted within these statistics once they are registered with the Insolvency Service by licensed insolvency practitioners. There can be a time lag between the date on which the IVA is accepted and the date of registration. Changes in volumes of registered IVAs may be in part due to changes in how insolvency practitioner firms operate. More timely statistics, including a table of numbers of IVAs by approval date, can be found in the monthly statistics.

DROs

After seasonal adjustment, the number of DROs increased by 18% in Q3 2023 to the highest quarterly level recorded since their introduction in 2009. This is also 49% higher than in the same quarter last year. DRO numbers in 2023 may have been affected by the opening of new DRO hubs.

Bankruptcies

After seasonal adjustment, the number of bankruptcies registered in Q3 2023 increased by 8% from the previous quarter and by 18% from than the same quarter last year.

Bankruptcies consisted of:

• 1,532 debtors’ applications, which was 3% higher than Q2 2023 and 9% higher than Q3 2022,
• 469 creditors’ petitions, which was 15% higher than Q2 2023 and 62% higher than Q3 2022.

76% of bankruptcies in the latest quarter resulted from debtor applications. Bankruptcy numbers in 2023 have increased from the 40-year low in 2022, but remained much lower than pre-2020 levels. Numbers of debtor bankruptcies were less than half of 2019 levels, while creditor petitions were 30-40% lower.

Figure 2: Despite an increase throughout 2023, the number of bankruptcies in Q3 2023 remained low compared to pre-2020 levels

England and Wales, Q3 2013 to Q3 2023, seasonally adjusted

Source: Insolvency Service

The long-term series back to Q1 1984 (where applicable) can be found in the CSV file that accompanies this release.

Breathing Space Registrations

Figure 3: Breathing Space registrations in Q3 2023 were higher than in Q3 2022

England and Wales, Q2 2021 to Q3 2023, not seasonally adjusted

Source: Insolvency Service

There were 23,089 Breathing Space registrations in Q3 2023. This is 26% higher than in Q3 2022. Of the 23,089 Breathing Space registrations, 22,722 were Standard breathing space registrations and 367 were Mental Health breathing space registrations. Between the start of the scheme in May 2021 and 30 September 2023, StepChange Debt Charity registered 63% of breathing spaces.

3.2 Rates of individual insolvency per 10,000 adults

In the four quarters ending Q3 2023, the individual insolvency rate was 22.7 per 10,000 adults in England and Wales (Table 2 and Figure 4 below). This corresponds to 1 in 441 adults having become insolvent in the 12 months ending 30 September 2023.

The insolvency rate is 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 10,000 adults. Therefore, the Q3 2023 rates, for example, were calculated using data covering the period Q4 2022 to Q3 2023.

Table 2: The rate of individual insolvency in the 12 months ending Q3 2023 was lower than for the 12 months ending Q3 2022, driven by a lower IVA rate

England and Wales, four quarter rolling rate per 10,000 adults

	Total individual insolvencies	Bankruptcies	Debt relief orders	Individual voluntary arrangements
2022Q3	24.7	1.4	5.0	18.2
2022Q4	25.0	1.4	5.1	18.5
2023Q1	24.5	1.4	5.2	17.9
2023Q2	23.7	1.5	5.5	16.7
2023Q3	22.7	1.5	6.0	15.1
Change in rate per 10,000 adults, 12 months ending latest quarter (Q3 2023) compared with:
vs 2023Q2	-1.0	0.1	0.6	-1.7
vs 2022Q3	-2.0	0.1	1.0	-3.1

Source: Insolvency Service

Change in rate numbers may not equal the difference in rates presented due to rounding.

The long-term series back to Q1 1984 (where applicable) can be found in the CSV file that accompanies this release.

In the four quarters ending Q3 2023:

• The IVA rate decreased by 1.7 in comparison to the 12 months ending Q2 2023, and by 3.1 from the 12 months to Q3 2022;
• the rate of bankruptcy was similar to both the 12 months to Q2 2023 and the 12 months ending Q3 2022;
• the rate of DROs rose by 0.6 compared to the rate in the 12 months ending Q2 2023, and by 1.0 from the 12 months ending Q3 2022.

Figure 4: The individual insolvency rate decreased in the 12 months to Q3 2023 in comparison to the 12 months to Q3 2022

England and Wales, four quarter rolling rate per 10,000 adults, not seasonally adjusted

Source: Insolvency Service

3.3 Bankruptcies by self-employment status

Bankruptcies by self-employment status are presented with a lag of one quarter on most other statistics in this release. This is because it can take several weeks for trading status to be recorded following the date of the bankruptcy order.

In Q2 2023, there were 344 bankruptcies (seasonally adjusted) where the individual was self-employed, this is 7% higher than Q2 2023 and 12% higher than the same period last year.

There were 1,505 bankruptcies among other individuals in Q2 2023, an increase of 7% compared with the previous quarter and 12% higher than the same quarter of the previous year.

Both bankruptcies amongst the self-employed and other individuals remain historically low.

Figure 5: Bankruptcies amongst the self-employed were lower in Q2 2023 than in Q1 2023, while bankruptcies for other individuals were higher.

England and Wales, Q2 2013 to Q2 2023, seasonally adjusted

Source: Insolvency Service

The long-term series back to Q1 1984 (where applicable) can be found in the CSV file that accompanies this release.

3.4 Self-employed/Trader bankruptcies by Industry (SIC 2007)

This section breaks down the self-employed bankruptcies (also referred to as ‘trader bankruptcies’) in the previous section by Standard Industrial Classification (SIC 2007) categories. Figures in this section are summed over four quarters to reduce the volatility associated with quarter-to-quarter changes. As noted in the previous section, data for Q3 2023 are not yet available.

The industries (in accordance with SIC 2007) that experienced the highest number of trader bankruptcies in the 12 months to 30 June 2023 were:

• Construction (341, which was 26% of trader bankruptcies);

• Other service activities (331, 25%);

• Wholesale and retail trade; repair of vehicles (137, 10%);

• Accommodation and food service (127, 10%); and

• Transportation and storage (124, 9%).

These five categories made up 79% of trader bankruptcies in the 12 months to 30 June 2023. They were also the most common categories in the 12 months to 30 June 2022, when they made up 80% of trader bankruptcies. Changes in the largest categories ranged from an 8% decrease in Transportation and storage to a 57% increase in Accommodation and food service.

Note that the numbers of insolvencies in these categories are likely to be partly driven by the number of self-employed people trading in a given category and do not reflect the relative likelihood of traders in each industry entering insolvency.

Figure 6: In the 12 months to Q2 2023 compared to the previous 12 months, changes in trader bankruptcies for the largest sectors ranged from an 8% decrease to a 57% increase

England and Wales, Q3 2021 to Q2 2023, not seasonally adjusted

Source: Insolvency Service

4. Individual insolvency in Scotland

Legislation relating to individual insolvency in Scotland is devolved. The Accountant in Bankruptcy, Scotland’s Insolvency Service, administers individual insolvency in Scotland. The figures below are not seasonally adjusted.

In Q3 2023, there were 2,074 individual insolvencies in Scotland, which was similar to the number in the same quarter of 2022. This comprised of 1,504 protected trust deeds and 570 bankruptcies (also known as sequestrations), of which 331 went into bankruptcy via the minimal asset process route. The rules regarding bankruptcy differ to those in England and Wales, so numbers of bankruptcies are not directly comparable.

Figure 7: Total individual insolvencies were similar in Q3 2023 to Q3 2022, but remained below pre-pandemic levels

Scotland, Q3 2013 to Q3 2023, not seasonally adjusted

Source: Accountant in Bankruptcy, Scotland

The long-term series back to Q1 1984 (where applicable) can be found in the CSV file that accompanies this release.

In April 2015, the Minimal Asset Process replaced LILA, and other changes affected bankruptcies, resulting in a large decrease during Q2 2015.

More detail can be found in the Accountant in Bankruptcy statistical release.

5. Individual insolvency in Northern Ireland

Individual insolvency in Northern Ireland is governed by separate, but broadly similar, legislation to England and Wales, and so figures are presented separately.

In Q3 2023 there were 376 individual insolvencies in Northern Ireland, 14% down on the same quarter of 2022. This comprised 295 IVAs, 41 DROs and 40 bankruptcies.

Figure 8: Total individual insolvencies reduced in Q3 2023 comapred to Q3 2022

Northern Ireland, Q3 2013 to Q3 2023, not seasonally adjusted

Source: Department for the Economy, Northern Ireland

The long-term series back to Q1 1984 (where applicable) can be found in the CSV file that accompanies this release.

6. Data and Methodology

6.1 Data Sources

Individual insolvency data for England and Wales were sourced from the Insolvency Service case information system (ISCIS), data for Scotland were sourced from the Accountant in Bankruptcy (AiB), and data for Northern Ireland from the Department for the Economy.

Breathing space data were sourced from the Breathing Space register, owned by HM Treasury (HMT), for which the Insolvency Service is a custodian.

Population estimates for persons over the age of 18, as published by the Office for National Statistics were used to calculate individual insolvency rates. For 2022 and 2023, for which population estimates were not yet available, the 2020-based population projections were used.

More information on the administrative systems used to compile insolvency statistics can be found in the Quarterly Statistics Methodology and Quality document.

6.2 Methodology and data quality

Detailed methodology and quality information for these statistics can be found in the accompanying Quarterly Statistics Methodology and Quality document.

The main quality and coverage issues to note:

1. Data for the latest quarter were extracted approximately five working days after quarter end. There is an increased likelihood that data on individual insolvencies may be revised in the future due to potential delays in data being entered onto Insolvency Service administration systems. Therefore, these statistics for the latest quarter are provisional and marked with a ‘[p]’.

2. Bankruptcy statistics by employment status, and industry breakdowns for those who were self-employed, are less timely than all other individual insolvency statistics, and are reported one quarter in arrears. This is because it can take several weeks for employment status to be recorded following the date of the bankruptcy order. Therefore, numbers for the latest quarter are not presented due to the known large undercount.

Seasonal adjustment

To aid comparison between quarters, underlying data for bankruptcies, DROs and IVAs in England and Wales were adjusted where there was evidence of seasonality to minimise the effect of the time of year and provide a true picture of the trends in insolvency. Full details on the models used to adjust the data can be found in the Seasonal Adjustment Review published in April 2023.

For Scotland and Northern Ireland only the unadjusted series have been presented, as agreed with the appropriate officials in the devolved administrations.

The seasonal adjustment models for England and Wales are reviewed on an annual basis, in accordance with the Insolvency Service Official Statistics Revisions Policy.

Rates of insolvency in England and Wales

Insolvency rates were calculated by dividing the total number of individuals entering insolvency in the previous twelve months by the mean average number of persons aged 18 and over residing in England and Wales over the corresponding period.

6.3 Revisions

These statistics are subject to scheduled revisions, as set out in the published Revisions Policy. Other revisions tend to be made as a result of data being entered onto administrative systems after the cut-off date for data being extracted to produce the statistics. Any revisions to these statistics will be marked with an ‘[r]’ in the relevant table.

7. Glossary

7.1 Key terms used within this statistical bulletin

Term	Definition
Bankruptcy	A form of debt relief available for anyone who is unable to pay their debts. Assets owned will vest in a trustee in bankruptcy, who will sell them and distribute the proceeds to creditors. Discharge from debts usually takes place 12 months after the bankruptcy order is granted. Bankruptcies result from either Debtor application – where the individual is unable to pay their debts, and applies online to make themselves bankrupt, or Creditor petition – if a creditor is owed £5,000 or more, they can apply to the court to make an individual bankrupt. These statistics relate to petitions where a court order was made as a result, although not all petitions to court result in a bankruptcy order. In Scotland, bankruptcy is often referred to as sequestration. On 1 April 2008, Part 1 of the Bankruptcy and Diligence etc. (Scotland) Act 2007 came into force making significant changes to some aspects of sequestration (bankruptcy), debt relief and debt enforcement in Scotland. This included the introduction of the new route into bankruptcy for people with low income and low assets (LILA). On 1 April 2015, part of the Bankruptcy and Debt Advice (Scotland) Act came into force making significant changes, including the introduction of the Minimal Asset Process (MAP), which replaced the LILA route into sequestration; mandatory debt advice for people seeking statutory debt relief; a new online process for applying for sequestration; and an additional year for people to make contributions to repaying their debts (increasing from three years to four, in line with protected trust deeds).
Breathing Space	For individuals, the Breathing Space scheme, launched on 4 May 2021, gives people legal protections from their creditors for 60 days, with most interest and penalty charges frozen, and enforcement action halted. Because problem debt can be linked to mental health issues, these protections are also available for people in mental health crisis treatment – for the full duration of their crisis treatment plus another 30 days.
Debt Relief Order (DRO)	A form of debt relief available to those who have a low income, low assets and debt no more than a specified value. There is no distribution to creditors, and discharge from debts takes place 12 months after the DRO is granted. DROs were introduced in April 2009. A change in eligibility criteria was introduced from 29th June 2021 in which the upper limit of debt increased from £20,000 to £30,000. In addition, the threshold on the value of assets that a debtor can hold and be eligible to enter into a DRO increased from £1,000 to £2,000; the value of a single motor vehicle that can be disregarded from the total value of assets increased from £1,000 to £2,000; and the level of surplus income received by the debtor before payments should be made to creditors increased from £50 to £75 per month.
Deed of Arrangement	An alternative way for a debtor to deal with their affairs than entering into bankruptcy or an individual voluntary arrangement. Deeds of arrangement require the approval of a simple majority of creditors in number and value, and do not require a nominee, report to court or a meeting of creditors to be held.
Income payment orders (IPOs) and agreements (IPAs)	If a Bankrupt has a higher income than needed to pay for their reasonable day-to-day living expenses, the Trustee in Bankruptcy may ask them to make payments towards their Bankruptcy Estate for the benefit of creditors. The Trustee in Bankruptcy may ask a Bankrupt to enter into an Income Payments Agreement (IPA) and if the Bankrupt refuses to enter into an IPA, the Trustee in Bankruptcy can apply to the Court for an Income Payments Order (IPO).
Individual Voluntary Arrangement (IVA)	A voluntary means of repaying creditors some or all of what they are owed. Once approved by 75% or more of creditors, the arrangement is binding on all. IVAs are supervised by licensed Insolvency Practitioners.
Protected Trust Deeds	Protected trust deeds are voluntary arrangements in Scotland and fulfill much the same role as IVAs in England and Wales. However, there are differences in the way they are set up and administered, meaning the figures shown here are not consistent with those provided for England and Wales.
Standard Industrial Classification (SIC 2007)	Used in classifying business establishments and other statistical units by the type of economic activity in which they are engaged. Further information can be found on the ONS website.