Record number of people took out debt relief orders in August

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A record number of people turned to debt relief orders (DROs) in August to ease their financial struggles, Insolvency Service figures show.

In total, the number of people going financially insolvent across England and Wales jumped by 16% in August compared with the same month a year earlier, according to Insolvency Service figures.

Some 11,348 people entered insolvency in England and Wales in August, which was also 7% higher than the total in July this year.

The insolvency total was made up of 4,239 debt relief orders (DROs), 622 bankruptcies, and 6,487 individual voluntary arrangements (IVAs).

The number of DROs taken out in August 2025 was a record high in the monthly records going back to their introduction in 2009, the report said.

The figure exceeded a previous high of 4,191 in June 2024.

The number of DROs in August 2025 was 88% higher than the long-term (2015 to 2024) monthly average of 2,252.

The report said: “DRO numbers have been at historically high levels since the abolition of the upfront £90 fee in April 2024, with the 45,871 DROs in the past 12 months being nearly twice as high as the long-term annual average.”

in June 2024, the criteria for DRO eligibility were expanded. The debt threshold was increased from £30,000 to £50,000 and the allowable value of an exempt motor vehicle was increased from £2,000 to £4,000.

The number of IVAs registered in August 2025 was higher than both the average monthly number seen in 2024 and the first seven months of 2025, the report said.

Bankruptcy numbers remained at about half of pre-2020 levels but were 2% higher than in August 2024.

Alongside the formal insolvencies, there were 7,395 “breathing space” registrations in August 2025 – 2% higher than in August 2024. Registering for breathing space gives people time to get on top of their debts.

Of the breathing space registrations, 7,290 were “standard” breathing space registrations and 105 were mental health registrations. A mental health breathing space registration has some stronger protections.

Meanwhile there were 2,048 company insolvencies across England and Wales in August, which was a 6% rise compared with August 2024 and 2% lower than the previous month.

Monthly company insolvency numbers in the first eight months of 2025 were slightly higher than in 2024 and at a similar level to 2023, which saw a 30-year high annual number of insolvencies, the Insolvency Service said.

One in 190 companies on the Companies House effective register (at a rate of 52.6 per 10,000 companies) entered insolvency between September 1 2024 and August 31 2025.

The report said: “While the insolvency rate has increased since the lows seen in 2020 and 2021, it remains much lower than the peak of 113.1 per 10,000 companies seen during the 2008-09 recession. This is because the number of companies on the effective register has more than doubled over this period.”

Giuseppe Parla, business recovery director at Menzies, said: “For many retailers, the festive season will once again decide whether they can weather the storm.

“As ever, our message would be for businesses to act early if they anticipate financial trouble. Doing so ensures that more options are available for you to secure a profitable future and remain trading.”

Colin Haig, a restructuring partner at accountancy and business advisory group Azets, said: “Companies are under pressure to cut costs wherever they can, but the reality is that they’ve been having to do that since the end of the pandemic.”

He added: “Given the ongoing issues businesses face with costs and shrinking margins, changes in UK tax policy making it more expensive to recruit and retain staff, national economic and geopolitical issues, and high interest rates affecting borrowing and debt, the business climate remains stormy.”

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