Debt and demographics: Insights from 2022 personal insolvency data

20 June 2023

In 2022, personal insolvency levels hit a three year high. In this blog, we break down data from the Insolvency Service on the different personal insolvency processes in England and Wales last year, and explore how age, location and gender affected the trends…

Insolvency rates rise

Data from the Insolvency Service shows that the overall insolvency rate in England and Wales reached 25.0 per 10,000 adults in 2022. This was a 1.7 per 10,000 adult increase compared to 2021 and 1.2 per 10,000 adults higher than in 2017.

What’s driving this? Well, a key reason is the fact that the Government’s pandemic support measures scaled back in late 2021 and ended completely in early 2022, but it’s also highly likely that higher interest rates, increasing energy bills and rising food costs have all played a part in increasing the number of people turning to an insolvency process to address their financial issues.

But despite the increase in personal insolvency numbers overall last year, the bankruptcy rate for adults in England and Wales actually reached its lowest level in in 2022.

Individual Voluntary Arrangements (IVAs) comprised the majority (74%) of individual insolvencies, setting a record high rate of 18.5 per 10,000 adults. This suggests that the demand is shifting towards alternative debt relief measures, such as IVAs and Debt Relief Orders (DROs) – a trend that will have been influenced by the change in eligibility criteria for DROs, which meant people with debts up to £30,000 could access the measure, instead of the £20,000 it had been previously.

Capital thrives, North East struggles

Looking at regional trends, it seems that, once again, the North East had the highest individual insolvency rate of all the regions in the UK, reaching 32.4 per 10,000 adults.

The North East also had the highest DRO and IVA rate, suggesting that individuals in the region are struggling more than in other parts of the country, perhaps due to lower average incomes, and a greater reliance on industries like manufacturing that have been heavily impacted by economic challenges.

In contrast, London has had the lowest rate of individual insolvencies since the series began in 2000, and had the lowest rates for DROs, IVAs and Bankruptcies. DRO numbers were higher than bankruptcies in London for the second consecutive year, which is likely to be reflective of the change in DRO eligibility criteria.  

Gender gap persists

Gender disparity continues to be an issue – with the insolvency rate for women sitting higher than for men for the ninth successive year. 2022’s gender gap was the highest on record, sitting at 5.0 per 10,000 adults, and was mostly driven by an increasing difference in IVA rates between men and women.

Across all age groups, except for individuals aged 65 and over, the insolvency rate was higher for women than men, and women were more likely than men to have a DRO or IVA.

according to Government research.

Generational trends

The trend for the 65 and over demographic to have the lowest individual insolvency rates continued in 2022 – for the 17^th year in a row – while adults aged between 25 and 44 experienced the highest insolvency rates last year.

The insolvency rate per 10,000 people increased for both demographics, which suggests that the end of the COVID measures and the cost of living issues took the most dramatic toll on people in these age groups.

Among all age groups, IVAs were the most common process. However, the proportion of IVAs was higher among younger adults, while bankruptcies and DROs were more common in older ones, which suggests that the levels of debt in the younger demographics may be lower than in the more mature ones.

Don’t struggle in silence

Financial instability is a concern for many people in the UK, but there is support available for anyone who is worried about money. We’ve developed a free guide to managing money worries, which outlines the formal informal solutions that are available in England and Wales, and is available to download here.