There were 10,136 insolvencies in February 2024 – almost a quarter more than at the same time in 2023, according to the Insolvency Service’s monthly figures.
As well as increasing insolvencies and debt management plans, applications for the Government’s ‘Breathing Space’ scheme shot up this year too.
A total of 10% more people used the service, which gives extra time to make a plan for dealing with debt, before the involvement of enforcement activity like bailiffs or other creditor collection services.
Insolvencies grew due to a 44% yearly surge in Debt Relief Order (DRO) applications – a Government solution to deal with personal debts you’re struggling to pay.
Debt Relief Orders shoot up
You can contact an approved debt advisor like National Debtline or Citizens Advice if you are struggling to manage your finances.
To be eligible for a DRO you’ll need to:
- Owe less than £30,000 in total
- Have savings or valuable items worth less than £2,000 in total
- Own a vehicle worth less than £2,000 (if you were to sell it today)
- Not have enough money left at the end of the month to make your debt repayments
- Have lived or worked in England and Wales in the last three years
- Not be bankrupt, have an interim order or an individual voluntary arrangement
- Not had a DRO in the last six years
Following rising energy bills, food prices and high mortgage costs in the cost-of-living crisis, a third of UK adults are in need of or almost requiring debt advice, the Money and Pensions Service revealed.
Contact National Debtline if you need help
David Cheadle, acting chief executive at the Money Advice Trust, the charity that runs National Debtline, has urged people who feel like they need help to reach out.
Cheadle said: “These figures highlight the impact that sustained high costs have had for many people, as the number of people accessing debt options has risen.
“As a growing number of people need help with their debts, services like National Debtline continue to play a crucial role in ensuring they access the option that is right for them.”
Cheadle added: “Breathing Space gives people time after seeking free debt advice to find a safe route out of debt without creditors chasing them.
“However, many people may not know about the scheme, or how it can help them – so my advice would be to get in touch with National Debtline if you are struggling to see if you are eligible for the scheme. Even if you aren’t eligible for this particular scheme, our advisers are here to help and can find the right option for you. “