UK personal insolvencies surge as IVAs hit highest level in nearly four years

Personal insolvencies in England and Wales rose sharply in July, driven by a surge in individual voluntary arrangements as households continue to grapple with heavy debt burdens and elevated living costs.

A total of 7,442 IVAs were registered during the month, 27 per cent more than in July 2025, according to figures from the Insolvency Service. The number was the highest monthly total since November 2022, excluding a temporary spike in December last year caused by the clearing of a backlog.

IVAs allow people to reach agreements with creditors to repay some or all of their debts over an agreed period. They accounted for 59 per cent of all personal insolvencies in the 12 months to July, up from 56 per cent in the preceding year.

Overall, 11,926 people entered insolvency in July, 14 per cent more than a year earlier. The total included 3,820 debt relief orders and 664 bankruptcies.

The figures suggest that rising household financial pressure is increasingly being channelled through formal debt restructuring rather than bankruptcy.

Andy McGill, restructuring and insolvency partner at Azets, said July had become the point at which “the cost of doing business became too heavy” for an increasing number of companies.

Retailers remain under pressure despite recent improvements in sales, he said, with higher volumes failing necessarily to translate into stronger value growth. Hot weather has also increased energy costs for businesses attempting to keep premises cool.

The property and construction sectors face additional strains. McGill pointed to weak housing demand, falling property values in some markets and highly leveraged business models, while contractors are confronting higher wages, thinner margins and projects delayed by rising costs.

Company insolvencies provided a mixed picture. There were 1,931 registered corporate insolvencies in July, 5 per cent higher than June but 5 per cent lower than a year earlier.

Meanwhile, 5,248 breathing spaces were registered under the Debt Respite Scheme, down 38 per cent annually, suggesting fewer debtors were entering the formal protection period designed to give them time to stabilise their finances.

The divergence between falling breathing spaces and rising IVAs points to a household economy where financial distress is increasingly translating into formal insolvency proceedings.