Personal insolvencies increase by 11% driven by debt relief orders

The number of personal insolvencies increased by 11% in June to 10,395, according to the latest figures from the Insolvency Service for England and Wales.

The growth is because of increases in debt relief order (DRO) applications, which an all-time high last month at 4,383 - a 15% increase from the previous record set in May.

DRO applications are growing because of changes announced in this year’s spring budget by the previous government. Those changes were:

• getting rid of the £90 administration fee
• an increase in the maximum amount of debt you can have from £30,000 to £50,000
• an increase in the value of a vehicle you can own from £2,000 to £4,000

As well as the increase in DROs in June, there were also 651 bankruptcies and 5,361 individual voluntary arrangements (IVAs).

IVA numbers over the past 12 months have been lower than during 2022, which was a record year for the product. But the 5,361 registered in June 2024 was 14% higher than the same month last year and 8% higher than May – the previous month.

In a sign pressure on household finances might be easing, the number of people being granted breathing space in June was down 12% on the same month last year to 6,970.