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IVAs outnumber bankruptcies - again

For just the second time in history, the number of people entering an IVA (Individual Voluntary Arrangement) in England and Wales has actually surpassed the number of people entering bankruptcy.

Between April and June this year, a total of 11,113 people entered bankruptcy, while 9% more (12,143 people) entered an IVA.

Interestingly, this was actually a greater difference than we saw the first time (and only other time) IVAs outnumbered bankruptcies. In the final quarter of last year, the numbers stood at 12,028 and 12,485 - meaning there were about 4% more IVAs than bankruptcies.

Insolvencies in England & Wales - 11 years of change

Source: The Insolvency Service 


What this means for the future is something we can't know for sure, but it's clear that bankruptcies are on a downward slope - largely due to the introduction of the DRO (Debt Relief Order). A quick look at the graphic above shows how the increase in DROs has pretty much matched the decrease in bankruptcies.

In the second quarter of this year alone, a total of 7,257 people entered a DRO, a form of insolvency which gives people who couldn't afford to enter bankruptcy a chance to access the benefits of being declared insolvent.

If Debt Relief Orders hadn't been available, some of those people might have entered an informal debt management plan, or they might have had to struggle on without any 'form of debt resolution'.

Having said that - as The Insolvency Service itself points out - some of the people entering a DRO might have ended up being declared bankrupt if the DRO option hadn't been available.