22OCT

Individual insolvency rate rises to 28.0

3 min read

16:23UTC

The individual insolvency rate in England and Wales reached 28.0 per 10,000 adults in the year to September, 2.0 short of the 30.0 level this desk set as its household distress trigger.

← Back to Debt passes £3trn, its ratio below forecast Jump to analysis ↓

EconomicAssessed

Key takeaway

Individual insolvencies rose to 28.0 per 10,000 adults, 2.0 below this desk's 30.0 trigger.

The individual insolvency rate in England and Wales reached 28.0 per 10,000 adults in the 12 months to 30 September, about one adult in 357, the Insolvency Service reported on 20 October⁠¹. It was 27.8 a month earlier and 24.8, one adult in 403, a year ago. The gap to 30.0, the level this desk set in July as a sign of household distress worth escalating, is now 2.0, from 2.2 in August.

Individual voluntary arrangements (IVAs), formal deals to repay part of a debt over time, reached 7,385, the highest month since November 2022 once a backlog clearance in December 2025 is set aside. IVAs usually last five or six years, The Insolvency Service says⁠². Bankruptcies did not follow: 671, similar to a year earlier and below August, so the rise in bankruptcies in the August figures has not continued.

Breathing Space registrations, which pause creditor action while a debtor gets advice, fell 33% to 5,149. Registrations have been lower since December 2025, after StepChange Debt Charity, the largest money advice group, changed its suitability criteria in November 2025, The Insolvency Service said⁠³.

Debt relief orders, the cheapest route for people with very little, came in at 3,838, below their 12-month monthly average. Six days before the Budget, households are the one ledger in this briefing still moving toward their trigger.

Deep Analysis

In plain English

When people cannot pay their debts, there are formal ways to deal with it. The Insolvency Service, a government agency, counts them every month. Bankruptcy is the most serious: a court takes control of your assets. An Individual Voluntary Arrangement (IVA) is a legal deal to repay part of what you owe over several years. A debt relief order is a cheaper option for people with very little money or property. The overall rate now stands at 28.0 for every 10,000 adults, about one person in 357. That is up from a year ago, mostly because more people are taking out IVAs.

Deep Analysis

Root Causes

IVAs suit people with regular income and unsecured debts they can partly repay over five or six years. A rise in IVAs alongside flat bankruptcies points to borrowers who still earn but cannot clear what they owe.

Energy arrears, consumer credit and higher fixed mortgage rates rolling off older deals all add to monthly outgoings. Real pay growth has stayed positive but slim, leaving little room to absorb those costs.

What could happen next?

Risk
At the current pace the individual insolvency rate could reach this desk's 30.0 trigger within about a year.
Meaning
Flat bankruptcies alongside rising IVAs suggest stress among people still in work rather than a collapse in incomes.

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: After the 2008-09 recession individual insolvencies peaked around 2009-10, with bankruptcies leading. In the decade that followed, IVAs overtook bankruptcy as the main route, so a rising rate today reflects a different mix of procedures from that peak.

Counter-parallel: In 2020 and 2021 insolvencies fell even as incomes were hit, because furlough, payment holidays and creditor forbearance held off formal action. Low insolvency figures then masked stress; today's rising figures come without that cushion.

Immediate: the rate rose 0.2 per 10,000 in a month, from 27.8 to 28.0, a pace that would reach the 30.0 trigger within about a year if sustained. Debt relief orders, at 3,838, ran below their 12-month monthly average.

Structural: Breathing Space registrations fell 33% to 5,149, but The Insolvency Service links that to StepChange Debt Charity changing its suitability criteria in November 2025. Changes in how advice bodies refer people move the monthly series without any change in underlying debt.

Consensus view: The Insolvency Service's figures point to slow, steady household strain, with the rate up 3.2 per 10,000 in a year and 2.0 below the 30.0 trigger Lowdown declared in July. Ofgem's indicators back that reading, with households owing energy suppliers £5.02bn at the end of June, up 13% on a year earlier.

Counter-view: The Bank of England's Financial Policy Committee judged households resilient in its September record, and mortgage arrears fell in the second quarter. On that view, rising formal insolvency reflects debts moving into structured deals rather than a wave of new defaults.

Key tension: Whether a rise driven by repayment arrangements rather than bankruptcies signals worsening distress or a shift in how debt is resolved.

Sources:Insolvency Service·Insolvency Service·Insolvency Service

Mentions:Insolvency Service →Individual Voluntary Arrangement →Debt Respite Scheme →StepChange Debt Charity →England →Wales →Financial Policy Committee →Ofgem →Bank of England →Citizens Advice →

First Reported In

Update #5 · Debt passes £3trn, its ratio below forecast

Insolvency Service· 22 Oct 2026

Read original →

Causes and effects

Caused by

Bankruptcies up 14% in England and Wales

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

Occurred 18 Sept 2026

Read story →

This Event

Individual insolvency rate rises to 28.0

Households are the one ledger in this briefing still moving toward their trigger, even as bankruptcies stay flat.

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.