22OCT

Bankruptcies up 14% in England and Wales

2 min read

16:23UTC

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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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

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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.

Led to

Individual insolvency rate rises to 28.0

The September rate of 28.0 followed the 27.8 reported for August.

Occurred 20 Oct 2026

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Different Perspectives

Pension Protection Fund

Acting chief actuary Aaron Pang put the rise to 135.0% funded down to liabilities falling 2.1% against a 1.0% fall in assets, reflecting higher gilt yields. On Lowdown's reading, the yields that lift the Treasury's interest bill leave 4,838 company schemes with a £280.7bn surplus that does not reduce state borrowing.

Torsten Bell

The Labour figure wrote on 14 October that the IMF's October figures show the fastest fiscal consolidation in the G7. The IMF forecasts the UK deficit falling from 3.8% of GDP in 2026 to 1.4% in 2031, a squeeze still to be delivered through taxes and spending.

Tax Justice UK

The left-leaning campaign group says ten tax reforms would raise over £60bn a year for public services, and on 22 October asked why higher taxes on extreme wealth remain politically difficult. It offers the tax-led exit to the IEA's cuts; the £60bn is its own claim, not an official costing.

Institute of Economic Affairs

The free-market think tank's Alternative Budget of 19 October would suspend the state pension triple lock for three years, freeze welfare in cash terms and move tax onto a wider VAT. It claims the day-to-day budget returns to surplus in 2027-28, its own projection rather than an official costing.

Resolution Foundation

The living-standards think tank said welfare spending ran about £2.5bn above expectations in September, City AM reported on 21 October, and its economist Greg Thwaites urged targeted energy support. Its figure lands as a Chancellor who calls welfare cuts a moral duty finalises the 28 October Budget.

Institute for Fiscal Studies

Director Helen Miller said a steady-as-she-goes Budget is not an option, with the IFS putting 2029-30 headroom at about £20bn, The Independent reported on 12 October. The IFS puts the cost of avoiding cuts and funding higher defence at around £35bn of tax rises or benefit cuts, more than any headroom estimate in circulation.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.