Decline in IVAs drives reduction in personal insolvency numbers

Today’s personal insolvency statistics show a continuing quarter-on-quarter decline in number of individuals entering a personal insolvency procedure. For Q1 2025, individual voluntary arrangement (IVA) numbers decreased by 3% and debt relief orders (DROs) fell by less than 1% compared to the previous quarter, but bankruptcy numbers grew, up 5% in the same period.

The figures reveal that there were 28,577 individuals entering either bankruptcy (1,838), DRO (10,803) or IVA (15,936) in Q1 2025.

DRO numbers remain high despite falling since their record quarterly high in Q3 2024. The abolition of the £90 administration fee in April 2024 saw an immediate rise in applications in Q2 and throughout Q3 2024; however, Q4 2024 saw those registrations slow (10,836 registrations) and effectively stabilise at 10,803 in Q1 2025.

Bankruptcy numbers were up 5% on the previous quarter, although, this still represented a 10% decrease on Q1 2024. This is not unexpected however given the increased access to DROs for debtors with lower levels of personal debt and assets. Debtors’ applications accounted for 73% of bankruptcies in Q1 2025. 

Andy Nalliah, personal insolvency partner at RSM UK said: “It is interesting that following the expected surge in DROs throughout the spring and summer of 2024, DRO registrations appear to have stabilised. However, the 10,803 registrations in Q1 2025 still represent a 28% rise on the same quarter in 2024 and we expect similar numbers going forward. It is clear therefore that the abolition of the application fee in April 2024, and the subsequent increase in the asset and debt level thresholds, has presented an appropriate alternative to bankruptcy for debtors with lower levels of debt.

“Despite the increase in bankruptcy numbers in Q1 2025, this was still a 10% decrease on the same quarter last year. Interestingly though, creditors’ petition led bankruptcy numbers have increased this quarter as a percentage of total bankruptcies, accounting for 27% of all bankruptcies in Q1 2025, up from 25% in Q4 2024.

“Breathing space registrations rose 14% to 24,162 in Q1 2025 - the highest level since Q1 2024. There appears to be a pattern emerging with breathing space registrations, reaching their highest in the first quarter for the previous two years, which may be a sign of debtors’ willingness to get their finances in order in the new year.

“The number of IVAs registered in the quarter continues to deviate. Whilst the 3% reduction equates to only 492 fewer registrations in Q1 2025, this decrease is responsible for the overall fall in personal insolvencies this quarter. Furthermore, the Q1 IVA registrations have fallen year-on-year for the third successive year since their Q1 2022 peak.”