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.
Reaction:
Clive Read, owner Goldmanread:
“The rapid pace of base rate increases has taken many borrowers by surprise. Each day we see people struggling with 30%-40% increases in their mortgage payments.
“This has had a massive impact on their ability to meet other unsecured debts, meaning some are taking drastic measures to “clear the decks” when it comes to outstanding loans and credit cards.
“However rather than the more dramatic solutions such as Bankruptcy and IVAs, we are seeing an increasing number of clients missing payments on credit commitments like loans or credit cards.
“Additionally, it’s becoming more common to see defaults on mobile phone and utility bill payments.
“This can unfortunately have a very negative effect when looking to arrange a new mortgage.
“Some mainstream lenders are starting to take a common sense approach to these financial blips but it’s important to seek advice if struggling and not bury your head in the sand.”
Darryl Dhoffer, director at The Mortgage Expert:
“The fact that the number of debt relief orders (DROs) is at its highest quarterly number since their introduction in 2009 is a clear sign that households are under severe financial strain.
“This is likely due to a combination of factors, most specifically the rising cost of living and higher interest rates, which have left many households extremely exposed.
“The data is a stark reminder of the financial challenges that many households are facing.
“The Government and other stakeholders need to do more to help those who are struggling to make ends meet.”
Peter Stamford, director at Moor Mortgages:
“This data doesn’t paint an especially great picture of the financial well-being of the average UK household.
“Mortgage lenders might take a more cautious approach given these figures, potentially tightening lending criteria or increasing their scrutiny of mortgage applications.
“That being said, the decline in overall insolvencies might make lenders slightly more optimistic about the general financial health of consumers.
“We live in complicated economic times, and for many households certainly very stressful times.”
Amit Patel, adviser at Trinity Finance:
“This comes as no real surprise and the writing has been on the wall for many people for a long time, as households have struggled with their finances due to high inflation and high interest rates.
“The tensions in the Middle East will exacerbate the number of debt relief orders, as the longer the conflict continues, the higher this could push oil prices, which will have a ripple effect on the supply chain.”
