7OCT

Bankruptcies up 14% in England and Wales

2 min read

12:52UTC

Bankruptcies rose 14% and IVAs 8% on a year earlier in the Insolvency Service's August figures, published on 18 September.

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EconomicDeveloping

Key takeaway

Bankruptcies and IVAs are climbing while the headline insolvency rate moves by tenths.

Bankruptcies in England and Wales rose 14% on a year earlier and individual voluntary arrangements (IVAs, formal deals to repay part of a debt) rose 8%, in the Insolvency Service's August figures published on 18 September⁠¹. Both household measures rose after two moves with stated causes are set aside, as Lowdown reads the release.

The Insolvency Service names causes for those two moves. Breathing Space registrations, which pause creditor action, fell 32%, which it attributes to a money advice body tightening its criteria in November 2025. Company administrations rose 60% on a year earlier, within a cluster of more than 250 connected real-estate firms entering administration between March and August⁠². The company insolvency rate slipped to 50.1 per 10,000, from 50.3 a month earlier.

The individual insolvency rate was 27.8 per 10,000 adults in the year to August, up 0.1 on a July figure now revised to 27.7. Because the rate counts insolvencies over a rolling twelve months, a run of monthly rises in bankruptcies and IVAs feeds into it slowly.

Deep Analysis

In plain English

Insolvency means a person or company cannot pay what it owes. For people, the main routes are bankruptcy, an Individual Voluntary Arrangement (IVA, a deal to repay part of the debt over time) and a debt relief order. The Insolvency Service counts them each month. In the year to August, 27.8 in every 10,000 adults in England and Wales entered one of these procedures. Two changes are explained by outside causes, so Lowdown sets them aside. Without them, bankruptcies are up 14% and IVAs up 8% on a year earlier.

Deep Analysis

Root Causes

The 60% rise in company administrations has a stated cause. More than 250 connected real-estate firms entered administration between March and August, so the headline reflects one corporate group's structure, not 250 independent failures.

The 32% fall in Breathing Space registrations also has a stated cause: a money advice body tightened its criteria in November 2025. Fewer people qualify for the pause, so fewer register.

With both set aside, the household measures that remain are bankruptcies up 14% and IVAs up 8%. Those follow from mortgage and rent costs, cost-of-living pressure and credit card debt, and the individual rate stood at 24.3 per 10,000 a year before the July release, which shows an underlying upward pressure.

What could happen next?

Risk
Another 2.2 points on the individual rate would reach this desk's 30.0 trigger; the September release will show the direction.
Meaning
Cluster-driven company administrations carry limited information about the wider company sector, so the 50.1 rate is the better gauge.

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: During the 2008-09 recession a credit squeeze exposed over-leveraged firms and company insolvencies rose to a far higher rate than today's 50.1 per 10,000. The shared mechanism is the same squeeze, and the cluster of 250 connected real-estate firms followed that route.

Counter-parallel: After the 1990-92 recession, individual insolvencies kept rising for several years while output recovered, because household debt taken on during the boom needed years to work through. A rising count need not mean a deepening recession.

Immediate: the individual rate of 27.8 sits 2.2 short of the 30.0 trigger this desk declared in July. The company rate slipped to 50.1 from 50.3 even as administrations jumped, because the rate is a 12-month figure per 10,000 companies and a single cluster has limited weight in it.

Structural: individual insolvencies concentrate in people with unsecured debts, so they sit alongside ONS data on household saving of 8.8% and Ofgem's £5.02bn of energy arrears. Mortgage arrears fell in the second quarter, so secured debt is holding while unsecured debt worsens.

Consensus view: Insolvency counts probably trail household distress, since people exhaust savings, credit cards and family loans before a formal procedure. On that reading, a 14% rise in bankruptcies reflects stress built up earlier.

Counter-view: The Insolvency Service itself attributes two moves, in Breathing Space and in administrations, to procedural and clustering causes, which shows that procedure can move a count without changing underlying distress.

Key tension: Whether rising bankruptcies and IVAs are the front edge of a household credit squeeze or a one-off change in which procedure people choose.

Sources:Insolvency Service·Insolvency Service

Mentions:Insolvency Service →England →Wales →Debt Respite Scheme →Individual Voluntary Arrangement →

First Reported In

Update #4 · £8.1bn over forecast, and the 30-year at 6%

Insolvency Service· 7 Oct 2026

Read original →

Causes and effects

Caused by

Insolvency rate closes on the 30.0 line

The individual insolvency rate rose from 27.7 revised for July to 27.8 in August.

Occurred 18 Aug 2026

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One adult in 369 went formally insolvent

The desk's 30.0 trigger was declared when the rate stood at 27.1 in June.

Occurred 29 Jun 2026

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Company failures ease to one in 199

The company insolvency rate slipped to 50.1 from 50.3 even as administrations rose 60%.

Occurred 18 Aug 2026

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This Event

Bankruptcies up 14% in England and Wales

Formal household debt remedies are rising faster than the headline individual insolvency rate shows.

Different Perspectives

Conservative Party

Leader Kemi Badenoch said Labour will run out of money and proposed lifting defence to 3% of GDP, paid for from welfare. Shadow work and pensions secretary Helen Whately put those savings at £23bn, "just the start".

Reform UK

Treasury spokesman Robert Jenrick pledged £80bn a year of spending cuts by the end of the next parliament and claimed £30bn a year of interest savings. The Spectator judged that the sums still do not fully add up.

Centre for Policy Studies

The right-of-centre think tank argued on 4 October that Britain is not a low-tax country once workplace pensions and student-loan repayments are counted. Its comparison rests on 2019 data.

Institute of Economic Affairs

The free-market think tank argued on 28 September that alcohol, tobacco and landfill duties raised £5.2bn less than the OBR projected. That comparison is separate from the five-month borrowing overshoot.

Resolution Foundation

The centre-left think tank said on 8 September that about £1 in every £12 of public spending now goes on debt interest. In July it put headroom against the fiscal rules at about £10bn.

Audit Scotland

It reported on 17 September that three Scottish budgets planned ScotWind drawdowns and drew nothing each time. It warned that using one-off receipts to balance annual budgets can weaken spending control.