Increased Number of Individuals Filed for Debt Relief during August

In August 2025, a record high number of Debt Relief Orders (DROs) were issued in England and Wales, signalling a growing trend in personal insolvencies. This surge in DROs comes amidst a stormy business climate, with ongoing issues for businesses and a rise in company insolvencies.

According to the latest statistics, a total of 11,348 people entered insolvency in England and Wales in August 2025. This number represents a 16% increase compared to the same month the previous year. The monthly company insolvency numbers for the first eight months of 2025 were slightly higher than in 2024 and at a similar level to 2023.

One in 190 companies on the Companies House effective register entered insolvency between September 1 2024 and August 31 2025. This rate has increased since the lows seen in 2020 and 2021 but remains much lower than the peak of 113.1 per 10,000 companies seen during the 2008-09 recession.

The increase in DRO numbers started after the abolition of the upfront £90 fee in April 2024, with 45,871 DROs in the past 12 months being nearly twice as high as the long-term annual average. The criteria for obtaining DROs were changed in 2024 by the government, specifically by removing the £90 application fee from April 6, 2024, making DRO applications free of charge. This adjustment made access to DROs easier for eligible individuals.

In June 2024, the criteria for DRO eligibility were expanded, with the debt threshold increased from £30,000 to £50,000 and the allowable value of an exempt motor vehicle increased from £2,000 to £4,000. As a result, more individuals are now eligible for DROs.

In August 2025, the number of DROs taken out exceeded a previous high of 4,191 in June 2024, reaching 4,239. This marks the highest number of DROs issued in a single month since records began. Of the total DROs issued in August 2025, 88% were higher than the long-term (2015 to 2024) monthly average of 2,252.

Giuseppe Parla, business recovery director at Menzies, suggested that the festive season will decide whether many retailers can weather the storm. Tom Russell, president of insolvency and turnaround trade body R3, stated that DROs provide a vital option for those in the worst situation with very limited assets and income, and their rising numbers reflect the reality that more households are unable to meet basic costs.

The report also states that there has been a sharp rise in administrations among professional services firms, particularly among law firms and management consultancies, and the retail sector continues to face sustained challenges. Colin Haig, a restructuring partner at accountancy and business advisory group Azets, stated that companies are under pressure to cut costs wherever they can.

Benjamin Wiles, managing director of Kroll, mentioned that the second half of the year has been relatively stable so far in terms of insolvencies. However, 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.

The report also highlights a 2% increase in 'breathing space' registrations compared to August 2024, with 7,395 registrations in total. Of these registrations, 7,290 were 'standard' breathing space registrations and 105 were mental health registrations.

In conclusion, the surge in Debt Relief Orders and company insolvencies in August 2025 underscores the challenging economic climate in England and Wales. As the festive season approaches, many businesses and households will be hoping for a reprieve from the stormy conditions.