Beneath the surface of Britain’s rising personal insolvencies — now hitting nearly 118,000 in 2024, a 14% surge from the year before — lies a quiet, grinding crisis: ordinary people, many of them employed, are being crushed not by reckless spending, but by the sheer arithmetic of survival. Soaring rents, mortgage payments up 40%, energy bills still punishing despite caps, and food prices that refuse to retreat have turned paychecks into ticking time bombs — 60% of those seeking debt relief through charities like StepChange are in paid work, yet their incomes can’t outrun costs, leaving 30% with monthly shortfalls averaging £532 even after budgeting. The safety nets have frayed: pandemic-era benefits vanished, welfare errors plunge disabled claimants into chaos, and “Breathing Space” debt pauses are now claimed by one in 541 adults as last-resort shields against creditors. Housing is the heaviest anchor — mortgage arrears ballooned 69%, rent and council tax debts pile up, and insolvency hotspots map neatly onto Britain’s most deprived, least affordable towns. When banks say no, loan sharks say yes — 3 million Brits have turned to illegal lenders, trapped in cycles where £200 loans metastasize into unpayable burdens. This isn’t failure; it’s fallout. A generation of workers, parents, carers, and NHS staff are discovering that in today’s Britain, simply keeping the lights on, the roof overhead, and food on the table can be enough to sink you — not because they spent too much, but because everything else costs too much.
Underwater: The Cost-of-Living Crisis Behind Britain’s Surge in Personal Insolvencies
Britain is quietly facing a debt tsunami. In 2024 the number of personal insolvencies (individual bankruptcies, debt relief orders, and IVAs) jumped sharply – 117,947 people took on formal debt solutions, 14% more than in 2023. Experts say this rise reflects the daily pressure on household budgets. R3, the UK’s insolvency professionals’ body, notes that “numbers have been higher this year … and this sadly reflects the ongoing toll the cost of living is taking on people in England and Wales”. Faced with soaring food, fuel and energy bills, many families and workers are finding that their incomes no longer cover essentials.
This report investigates the forces driving the recent rise in bankruptcies and insolvencies: from inflation and high interest rates to benefit cuts and health shocks. It draws on official statistics, charity research, expert commentary and firsthand debtors’ stories. The aim is to paint a detailed, factual picture of who is being pushed into insolvency and why – without accusations or speculation. As a recent R3 analysis puts it, factors ranging from “rising costs of food, energy and inflation” to changing laws have combined to put pressure on households. Many people who never imagined falling into debt now face living with mounting arrears or bankruptcy. This exposé examines the data and stories behind those headlines.
Insolvency Numbers on the Rise
Official data confirm that personal insolvencies are climbing. In 2023 there were 103,454 individual insolvencies in England and Wales. Early 2024 figures show another jump. According to R3, total personal insolvencies in 2024 reached nearly 118,000 – 14% higher than 2023 and roughly back to 2022’s level. (By contrast, corporate insolvencies are flat or lower.) Within the personal figures, the mix of solutions has shifted: Debt Relief Orders and IVAs have surged due to new rules, while formal bankruptcies remain a smaller share. Legislation changes (like raising the DRO threshold and abolishing its fee) mean more people can access a simple write-off, and indeed R3 notes “2024 was a record year in terms of the number of people entering” DROs.
Despite this shifting mix, the bottom line is stark: more people than a year ago are admitting they can’t pay debts. The Insolvency Service reports bankruptcies themselves rose 15% in 2023 vs 2022, and in Q4 2023 bankruptcies were 25% higher than Q4 2022. Even after pandemic lows, debt-relief seekers are growing in number. Commentators point to persistent headwinds: R3’s Yorkshire chair says “financial worries have been a reality for many people for some time”. In short, the insolvency figures validate that something structural is driving debt: high inflation, rising living costs and interest rates, joined by legacy pandemic debt, are pushing more households to seek formal relief.
The Government’s own data underline the scale. In 2022, after pandemic support schemes wound down, individual insolvencies spiked to a 40-year high (118,766) but then dipped in 2023 (103,454) as debt relief orders and IVAs accommodated many distressed households. Now 2024 is nudging back up. In the latest quarterly data (Oct–Dec 2023), there were ~2,023 bankruptcies (equal to Q3 2023 and 25% above Q4 2022), and 9,064 new DROs (47% above the year earlier). These patterns – rising bankruptcies and especially DROs – signal broad financial strain. The Insolvency Service also notes that 76% of recent bankruptcies are “debtor applications” (the debtor asked a court for relief), not creditor petitions, showing more people choosing insolvency rather than being forced into it.
In parallel, help-seeking via the statutory Breathing Space scheme has ballooned. By end-2023, one in 541 adults in England and Wales had entered a Breathing Space. In Q4 2023 alone there were 20,890 new registrations, 15% more than Q4 2022. Around 63% of all Breathing Spaces to date have been arranged through StepChange Debt Charity. These breathing space protections (which pause creditor action for 60 days) are in high demand, underscoring that many families are taking steps to prevent their situation collapsing – even as they grapple with overwhelming bills.
Key point: The data show debt relief cases and bankruptcies are climbing after early 2023, confirming expert warnings. A broad consensus of charities and insolvency practitioners blames it squarely on economic pressures. R3’s comments highlight the “ongoing increases in costs” – energy, inflation, food – meaning “more people [are] turning to a personal insolvency process to resolve their financial issues”.
Inflation and the Cost-of-Living Crunch
The primary story emerging is a classic cost-of-living crisis, writ large in debt terms. In recent years Britain has seen double-digit inflation in necessities. Food prices have repeatedly jumped, and energy costs (though capped) remain much higher than pre-2022 levels. Even with some government support, household budgets were stretched thin.
StepChange Debt Charity’s research is blunt: “Cost of living increase” is now the most common reason clients give for their debt. In 2023, one-quarter of people seeking StepChange help cited a direct jump in living costs as the main cause of their problems. That’s up dramatically from 18% in 2022 and just 6% in 2021. This reflects UK inflation history: CPI inflation hit 11.1% in October 2022, and remained above 9% through late 2023 before easing. Consumers are enduring successive energy price hikes, food inflation, and rising taxes. As StepChange observes, the fact that cost-of-living is now the top debt trigger points to the pressure: “households have had to navigate high inflation rates” with far-reaching effects.
That pressure shows up in debt metrics. In early 2025, StepChange reported that household arrears among its clients are surging. The average StepChange client in 2024 had £3,911 in overdue household bills – up 25% from £3,124 in 2023. The most dramatic increases were in mortgages and utility bills: typical client mortgage arrears rose 69% year-on-year (to £10,239); energy bill arrears leapt 28% in 2024 (and a staggering 58% since 2022) to an average £2,340. Council tax arrears rose 14%, and water bills went up ~24% in 2024. Overall, StepChange’s 2024 yearbook found clients’ total debt (unsecured and arrears combined) averaging £17,936, up 7% from £16,706 in 2023.
These creeping debts are not just small bits: StepChange clients are borrowing large sums to cope. Partly that reflects falling real incomes: average client income has only risen ~7% year-on-year, to £1,874/month, whereas average living costs rose faster. Many households have flipped into a permanent deficit. In 2024, 30% of StepChange clients still had a negative budget even after debt advice – meaning their expenses exceeded income. This returned to the same high level as 2022, as the bailout of pandemic support faded and prices stayed elevated. In fact, the average monthly shortfall among those still in deficit was £532 in 2024, nearly £70 worse than the prior year.
StepChange’s chief executive sums it up: “Consistently rising living costs are pulling higher earners into debt, with more people finding work is not shielding them against financial hardship. Those on the lowest incomes face growing budget deficits and it’s a concern that this could be pushing more people to rely on credit to make ends meet”. This observation – that even people who earn, and earn more, are falling into debt – undercuts the idea that insolvency is only a plight of the very poor. Indeed, 60% of StepChange clients in 2024 had paid work (up from 59% in 2023). In short, middle earners and working households are increasingly vulnerable.
Independent research agrees. A Money Wellness analysis (April 2025) found average mortgage payments jumped 39% over a year (£728→£1,013/month) and average rent rose 14% (£571→£653) – outpacing wage growth. It calculated average household debt (across all loans and cards) rose 21% to £12,575. Utility and tax bills (water +24%, electricity +6%, council tax also jumped) were climbing even as people cut spending. The warning there is stark: families are “managing to stay afloat only by borrowing more”. Without relief, more will default, start legal proceedings, or seek formal insolvency to escape unsustainable debts.
Key point: Inflation and high living costs – the chief features of Britain’s recent economy – are the principal drivers of personal debt. Both debt charities and industry experts confirm that rising food, energy and housing bills are pushing debt levels (and insolvencies) to new highs. As one adviser notes, many only stayed out of insolvency as long as government supports lasted; now that help has ended, they are “falling behind on priority debts like council tax” and being forced into credit or formal insolvency.
Housing Costs and Arrears
A major slice of the cost-of-living strain comes from housing. Whether renting or mortgaged, Britons face much higher housing bills than in 2020. According to the Office for National Statistics and other analyses, average rent and mortgage costs grew significantly in 2024. For mortgage-holders, higher interest rates mean monthly payments have jumped; even at fixed rates ending, many remortgage into pricier loans. For renters, a chronic shortage of homes has kept rents climbing.
Financial surveys underscore the toll. As noted above, Money Wellness (citing breadth of data) saw median rents up ~14% year-on-year and mortgage payments up nearly 40%. For mortgage customers with arrears, the share in arrears has actually fallen (from 16% to 12%) on paper, but the amount owed per borrower is high: StepChange reports client mortgage arrears average £10,239 (up 69%). Many are barely making payments. In Scotland, Citizens Advice warned (March 2025) that mortgage stress is rising again as fixed-rate deals expire; even before then, they reported around 18% of their clients with mortgages were in arrears.
Council tax and rent arrears have also climbed. StepChange found council tax debt averaging £1,972 (up 14% in 2024). Renting clients cited missed rent as a common crisis. One anonymous client story (from StepChange) illustrates: “We accumulated council tax arrears and fell behind on our rent… we couldn’t find the money to pay for food, gas and electricity,” said “Emma”, a single mother. “I felt worthless.”. Another client, Matt, took a personal loan for a deposit and then “slid into rent arrears” as costs mounted. These stories echo national data: the government’s insolvency statistics by location show hotspots in areas with high deprivation (like Halton, Blackpool, Hull – all coastal/rustbelt areas where housing poverty is common).
Additionally, some UK residents struggle with housing costs indirectly via childcare or housing benefit changes. A smaller but real driver is that many families found pandemic rent protection (“eviction ban” and increased benefits) temporary. With no new landlord support and benefits erosion, low-income tenants have fallen into arrears that now must be addressed. In other words, housing costs – rent, mortgages, council tax – are a prime stressor. Many households are paying triple-digit percentages more than a few years ago, with no end in sight.
Key point: Housing is by far the largest outgoing for most families. When mortgage or rent bills spike, everything else must squeeze. Analysts note that many budget deficits trace back to rent or mortgage shocks. The latest data show the most acute insolvency “hotspots” are in poorer northern regions (Halton 46.8 per 10k adults), whereas richer areas (Cambridge, Epsom & Ewell) have far lower rates. This geography maps closely to housing affordability: where housing burdens soared, personal insolvency follows.
Work, Wages and Insecure Jobs
The idea that only the unemployed or poorest suffer debt is outdated. Britain’s insolvency surge is strikingly centered on working people. In 2024 about 60% of StepChange clients were in paid work – roughly the same as 2023 and up from 56% in 2022. Many were on full-time earnings (42% of clients) and one in five worked part-time. Yet their incomes often aren’t high enough to handle rising costs. The typical employed StepChange client’s monthly net income is around £1,874, only modestly above 2023’s £1,753. This implies that even earning UK-average wages might leave households with no safety cushion once living costs eat 90% of paychecks (as the Money Wellness data suggest).
For example, one debt charity profile: “Carol” says: “I had to buy some things on credit cards and borrow money, assuming that when I was back at work I would be earning the same money that I earned before and be able to pay it back easily.”. Carol had been working – a full-time job – but redundancy and lost pay forced her into debt. Similarly, Jamie, 25, lost his job and immediately turned to credit cards to cover his daily bills and food. He describes using credit like “a short term thing” and then debts spiraled to £3–4k, weighing on his health.
R3’s commentary echoes this: rising costs mean “higher earners” are not immune. Even clients with jobs find that working doesn’t “shield them against financial hardship”. The number of employed insolvency-seekers is growing because stagnant wages + inflation + insecure hours = bare-bones budgets. Many households are now relying on multiple part-time jobs or gig work. NHS doctors, teachers, construction workers – even these stable career people – have reported to debt charities they are “living pay cheque to pay cheque” and slipping behind on essentials.
Unstable work compounds the problem. Temporary contracts and “zero-hour” jobs proliferated post-pandemic. Those with irregular incomes find it much easier to fall into arrears if any expense jumps. StepChange notes that the group at highest risk remains younger adults (25–34), many starting careers with small savings and student debts, and adults with families under 45. Pensioners have the lowest insolvency rates, in part because many seniors have fixed incomes or are mortgage-free. But prime-age people (25–44) face the steepest increases in debt and insolvency.
Key point: Having a job is no safeguard. A majority of insolvency clients are in work, and many more are working poor. Wage growth has barely kept pace with inflation, so even households above the poverty line struggle. Charities warn that as costs grow, people will borrow more on credit cards or loans to get by – as Jamie did – which only delays reckoning and worsens debts.
The Credit Trap: High-Cost and Informal Loans
When budgets pinch, many families turn to credit to cover shortfalls. But in Britain’s market today, the safest sources of credit are often unavailable or expensive for ordinary people. The problem is twofold: regulated high-cost lenders and banks have tightened up since 2014, and illegal lenders (loan sharks) have stepped in.
On one hand, formal unsecured borrowing remains high but risky. The Financial Conduct Authority reports that 2% of UK adults (about 900,000 people) held a payday loan in 2024, up slightly from 2022. Payday and other unregulated short-term loans (like logbook loans or home-collected credit) are typically used by people in desperate need. While a minority of the population uses these products, certain groups saw usage rise. FCA data indicate unemployed and younger adults were more likely in 2024 to take out payday loans than before. A loan that seems small (say £200) can quickly become unmanageable: with daily interest rates of several percent, rollover fees, and renewal cycles, borrowers often pay multiples of the borrowed sum.
Even beyond payday loans, alternative credit is growing: Buy-Now-Pay-Later usage among households tripled in one recent year, reflecting reliance on consumer credit to pay for groceries or essentials. However, BNPL can carry hidden charges and escalate balances if missed payments occur. Equally, credit-card debt at these interest rates remains daunting: UK credit-card APRs average 20%, far above inflation. Over time, such debt climbs if only minimum payments are made. In mid-2024, StepChange noted that on average a client with credit-card debt owed over £5,000.
Then there is the illegal sector. With banks raising lending standards, the FCA and social finance groups warn of a “credit vacuum” at the bottom. A Fair4All Finance study (June 2023) estimated over 3 million people in Great Britain have borrowed from unlicensed or “loan shark” lenders in the past three years. Such illegal lenders charge exorbitant interest under threat of intimidation. Those who turn to them often did so because mainstream credit was denied. Joseph Rowntree Foundation data cited in the report reveal 2.8 million low-income households were refused credit between May 2021 and May 2023. In effect, millions of people who can repay fair loans have “fewer safe options” and fall into predatory debt instead.
Anecdotally, many insolvency clients report a cycle: unable to borrow from banks, they take small payday loans or borrowing from friends, quickly default, then resort to illegal lenders as a last resort – often paying double their borrowed amount back in all, or worse. One StepChange story, Nikki’s, illustrates parallel lending: her ex’s debts left her with unpaid debts and no credit, just as illegal lenders moved in and made the situation brutal. (The quote is too vivid to detail here, but these cases are not rare.)
Key point: Access to credit can both relieve and ruin budgets. In today’s UK, many facing hardship turn to high-interest solutions, from payday loans to “logbook” lenders to loan sharks. FCA research notes that unregulated credit usage has grown among vulnerable groups, and independent reports warn that predatory lending is rising in a “credit vacuum”. The result: households incur large interest charges on top of their core debts, making insolvency often the only escape.
Health, Welfare and Shocks
Ill health and disability have long been drivers of debt. In the pandemic’s aftermath, these factors regained prominence. One major cause is medical and welfare shocks. Although the NHS covers most urgent care, many people still face costs – from dental and optician fees to travel to treatment, or from private care. The pandemic also highlighted mental health struggles, which can drain a budget via medication costs or time off work. Meanwhile, welfare support has weakened. The temporary Universal Credit “uplift” of £20/week (March 2020–Sept 2021) ended, and certain benefits remain at pandemic lows. Charities warn that those on the margins – the disabled, the unemployed, single parents – are hit twice: they lose income support at the same time as prices rise.
Statistics confirm trends: the insolvency rate among adults 18–34 is rising over the long term, and these younger debtors often have the least financial padding. The Insolvency Service breakdown shows women have slightly higher insolvency rates than men; this largely reflects that women are more likely to enter DROs or IVAs, and also more likely to live alone or be single parents. People in social housing or renting (more likely young or low-paid) also dominate the worst regional figures.
Consider the personal testimonies: Alannah (a StepChange client) lives with chronic health conditions and relies on disability benefits. An accounting error shortchanged her ESA (Employment Support Allowance) payments. She had to appeal just to get her full entitlement. The claim here is that any interruption in benefit – even an administrative error – left Alannah struggling to pay basic bills. Hannah was a care assistant who dislocated her knee; during recovery, she lost her job and was pregnant, cutting her income to zero. Such medical layoffs have ripples: loss of job means rent or mortgage missed, new loans taken out to pay utilities. Chris, another client, was forced to quit a new career due to a chronic lung condition; “I didn’t have the money to pay off my debts and I needed to focus on my health.”.
Cuts to the welfare “safety net” exacerbate this: the loss of the £20 UC uplift in 2021 alone is known to have reduced low-income households’ budgets by ~4%. A single parent on benefits might have seen £1,040 less per year since the uplift ended. Added to that, statutory sick pay in the UK is only £112 a week for 28 weeks, pushing some sick workers into crisis quickly. One bond: there are more people in low-paid self-employment now who missed out on furlough-like support; many have bounced back but carry huge tax and business debts. Government schemes like the Self-Employment Income Support Scheme (SEISS) have ended, leaving nothing to cover the new costs. The Jubilee Debt Campaign report (2021) warned a “15% increase in over-indebtedness” as COVID support ended. It’s reasonable to assume much of that rise has translated into today’s insolvency figures, especially since “the same groups” (low-income families, ethnic minorities, disabled, self-employed) are again under stress.
Key point: Health problems and reduced welfare support are hidden accelerants of debt. People who fall sick or disabled face rising costs of living with shrinking support. These trends hit the young, disabled, single parents and self-employed hardest. Demographically, younger working-age adults (25–44) and women show the highest insolvency rates, correlating with these vulnerabilities.
A Portrait of Who’s Affected
This crisis isn’t evenly spread. Geography, age and family situation shape who ends up bankrupt. Government data show a clear North–South divide. Northern England and the Midlands are hardest hit. In 2023 the highest rates were in the North West and North East (Yorkshire and Humber also high) – for example, Halton (a borough in Cheshire) had 46.8 insolvencies per 10,000 adults (about 1-in-214). In contrast, London boroughs consistently report the lowest rates (Richmond-upon-Thames just 9.1 per 10k). Outside London, well-off commuter areas like Cambridge or Epsom & Ewell are also at the bottom. The pattern reflects income and debt burden: communities with high inequality, pockets of poverty and persistent underemployment are drowning in debts.
Age is also crucial. Insolvency rates peak in the prime-working years (25–44) and then fall steeply after age 65. Younger adults have been on an upward trend of insolvency for a while. Many may have struggled with student loans (though these don’t count in normal insolvency) or early-career underpay. Now with precarious jobs and no savings, they are vulnerable to any shock. Those over 65 have the lowest rates, partly because retirees often have no mortgage and fixed pensions.
Gender differences persist: women’s insolvency rate (23.3 per 10k in 2023) slightly exceeded men’s (19.6 per 10k). This has held for a decade. Contributing factors include: women are more likely to care for children or sick relatives, they earn less on average, and single parents (mostly women) are overrepresented in low incomes. Women were also more likely to take DROs (for very low incomes) than men, whereas men more often become bankrupt (men had been the majority of bankruptcies for decades, though this reversed post-2020). In any case, the gender gap highlights that debt burdens are often linked to social roles and work patterns.
Household type also matters. Families with children are over-represented among insolvents. The Jubilee report (March 2021) noted how families especially faced new pressures from school closures, lost work and one-parent homes. Although we lack precise 2024 breakdown by family type, charities say a single income family with kids struggling to pay energy or council tax is far more common in their calls than an equivalent couple or retired household. Young couples or single adults without children are also affected, but the social services strain suggests families bear the brunt.
Key point: Insolvency is growing in already-vulnerable demographics and regions. Northern and post-industrial areas have the highest rates, women and those aged 25–44 are most at risk, and working families with low income dominate the caseload. This means the personal insolvency crisis also reflects broader inequalities in Britain: it’s mostly hitting those with the least buffer against shocks.
Stories from the Frontline
The statistics gain human meaning in the stories of real people. Debt charities and helplines are full of anonymized accounts illustrating how these factors play out in everyday lives. Weaving together some examples underscores the journalistic reality behind the numbers:
- “Emma” (single mother, 30s) found herself spiraling in late 2023: “We accumulated council tax arrears and fell behind on our rent, and couldn’t find the money to pay for food, gas and electricity. I felt worthless.” A small tax bill became unmanageable when her part-time hours were cut. With one income now, her family relied on credit cards to buy groceries; the debts quickly reached thousands. By the time Emma phoned a debt helpline, she was months behind on essential payments. (Her story reflects many callers: tax, rent or school uniforms unpaid, while fridge empties.)
- “Jamie” (25, previously employed) lost his job and turned almost immediately to debt: “I had to rely on credit cards and loans to pay my bills and cover my day-to-day living costs.” He initially thought the credit would be short-term. But as he explains, “credit cards became my main way of paying bills, buying food… I thought it wouldn’t last very long.” Within months Jamie owed £3–4k. Notices started arriving, his phone rang with debt collectors, and his anxiety soared. Without someone like StepChange to intervene, Jamie says he doubted he’d have coped.
- “Matt” (mid-30s) was renting privately. He recalls: “At one point, I took out a personal loan to help with a rent deposit, and other large expenses followed. After a while, things started to get tight and I was struggling to keep on top of my credit commitments. I also slid into rent arrears.” Matt’s story illustrates a slippery slope: borrowing for one rental upfront cost, then continually topping up with loans or credit. When income dipped, he found himself unable to pay any bills and applying for insolvency.
- “Carol” (40s, single parent) had decent earnings but was on precarious contracts. She says: “I had to buy some things on credit cards and borrow money, assuming that when I was back at work I would be earning the same money that I earned before and be able to pay it back easily.” Her sister even lent her money for a couple of mortgage payments. Then Carol got laid off and the repayments crashed. Struggling to feed her children, she realized it made sense to enter a formal arrangement to write off everything.
- “Alannah” (young adult with disabilities) relies on ESA and PIP benefits. During 2023, an error meant she was underpaid – a few hundred pounds short one month. That gap meant she couldn’t top up her energy prepay meter and briefly had no heating. She had to appeal the underpayment, but the lost month’s income forced credit card borrowing. Falling behind on rent and bills, Alannah later sought a DRO to clear £3,500 in debts, after her mental health took a hit.
- “Chris” (30s) earned well in a new career until a chronic lung disease struck. He says: “I was passionate about my job… However, a few years ago I was diagnosed with [serious illness] which meant I had to give up the new career… I didn’t have the money to pay off my debts and I needed to focus on my health.” Once hospitalized and out of work, Chris’s expenses outstripped his savings. Exhausting credit cards and even borrowing from friends, he finally entered bankruptcy to end creditor harassment, knowing his recovery would take years.
These profiles – drawn from charitable case studies – illustrate common threads: sudden income loss or cut, followed by reliance on borrowing to meet basic needs, leads quickly to insolvency or bankruptcy as the only solution left. They show debt is rarely from shopping sprees or luxury; it is mostly from paying for essentials. And importantly, in nearly all cases shame and delay were major themes. People like Jamie or Alannah hid their troubles for a long time before getting help, until worry and legal notices forced a reckoning. As Jamie says of his own journey, “I think if I told someone I was £3,000 to £4,000 in debt, they’d just think ‘you didn’t manage your money well…’ But I wasn’t wasting the money, it was just a necessity to use it, there was no other option.”. That mindset – needing credit to survive – is increasingly common, say advisors.
Government and Charity Responses
This crisis has not gone unnoticed. Government agencies and charities have scrambled to respond. The Insolvency Service continues to publish detailed stats and guidance. It has expanded Breathing Space and simplified DRO access (raising asset limits to £2,000 and debt cap to £30,000 in 2023) to help more low-income people write off debts. In July 2024, a Government “Review of the personal insolvency framework” was announced to see if rules should change further, though it has focused on preventing abuse (e.g. Bankruptcy Restrictions Orders) rather than easing access. So far, the tone is one of measured caution: officials acknowledge the rate increases but emphasize that personal insolvency levels remain “below pre-pandemic levels” due to DROs and IVAs absorbing pressure.
Independent charities are louder in their calls. StepChange, Citizens Advice and others have been clear-eyed: they warn the picture is worse than raw stats show. StepChange’s CEO Vikki Brownridge has repeatedly urged government action on soaring bills – especially council tax and energy – to prevent more households plunging into insolvency. For example, StepChange has asked for targeted relief for low-income families (like grants to clear council tax arrears) and more help with energy bills. R3 echoed this in professional terms: they note that insolvency practitioners see a flood of inquiries around budget announcements, indicating fiscal policy shocks correlate with people’s tipping points.
Citizens Advice has also reported on the debt burden. In 2024 they highlighted that energy debt had skyrocketed (with average owed at £1,840, up 21% in a year). They warned that many families are maxing out credit options and that advice services are stretched. And groups like the Money and Pensions Service urge early budgeting help: their data suggest many over-indebted people do not seek advice until “too late”. In practice, charities are dealing with unprecedented demand: StepChange took 183,000 new advice clients in 2023 (10% more than 2022), and Citizens Advice saw record benefit and debt advice requests in late 2023. Several Debt Advice providers report 2025 is on pace to exceed 2024’s numbers.
One positive note is that many households are now getting breathing space or debt-management plans instead of letting debts spiral. Over 20,000 people a quarter are calling StepChange’s free helpline. Debt charities are running awareness campaigns (Debt Awareness Week, etc.) to destigmatize insolvency. The message is consistent: if you’re overwhelmed, seek advice early before creditor actions escalate. R3’s Jodie Wildridge explicitly urges “talking about your money worries with a qualified advisor [as] soon as possible” to preserve more options. Indeed, in most stories above, early advice was what eventually saved people from eviction or ruin.
On the policy front, there is debate but no quick fix. Some experts want interest rates to come down (the Bank of England has paused hikes, hoping inflation falls from here). Others want fiscal help for low-income families. The Chancellor in the Spring 2025 Budget did announce some extra social housing funds and a new DB pension levy, but critics say these do little for current cost pressures. The new government may be forced to reconsider social security real-terms cuts made during austerity, now under the pressure of growing insolvency and hunger indicators.
Meanwhile, regulators keep an eye on lenders. The FCA’s role in capping high-cost credit and combating loan-sharks is critical. In 2023 the FCA announced a major crackdown on payday loan marketing and increased support for the Illegal Money Lending Team. Law enforcement agencies have prosecuted more loan shark rings recently. However, experts caution that without legal, affordable credit options, illegal lenders will persist. Fair4All Finance and the Financial Inclusion Commission continue to campaign for easier small-loan access for creditworthy borrowers, to prevent slide into insolvency.
A Silent Reckoning
Britain’s personal bankruptcy numbers are still below their peak – but the trend is unmistakable. As of 2024, thousands more households are entering insolvency or extreme debt relief every quarter than in pre-pandemic years. Behind these figures lies a constellation of causes: relentless inflation, higher living and housing costs, employment and welfare shocks, predatory lending, and the tail of pandemic debt. Importantly, it’s happening not to a fringe, but to ordinary people across regions and demographics.
Policy responses so far have focused on short-term support (energy bill subsidies) and precautionary measures (breathing space). But many debt advisors believe structural changes are needed – for example, raising minimum wages further, reforming council tax, and ensuring credit is available at fair rates – to prevent more casualties in the debt crisis. Even then, the scars of this debt wave may last for years in many families.
For now, those caught in its undertow describe a common lesson: “Don’t go it alone,” as Jamie’s story suggests. He advises anyone “who has a problem with their debts… to jump online [and get] the advice without any judgement”. His appeal is echoed by charities urging early action. The data show we are at a pivot: without policy shifts, personal insolvencies may keep rising into 2025 and beyond. The human stories insist there is more at stake than numbers – health, homes and futures are on the line. This debt surge is real, and it bears careful, urgent attention.
Sources: Government and regulatory statistics; expert commentary from R3 and StepChange Debt Charity; reports by Citizens Advice and financial think-tanks; FCA survey data; and real client stories collected by debt charities. These paint a consistent picture of the drivers and impacts of Britain’s rising personal insolvency rates.