Having participated in one of last year’s workshops on the reform of personal insolvency legislation, I read with interest the Insolvency Service’s recently published initial evaluation and conclusions.
For those interested, a link to the full report is provided at the end of this summary.
With over 25 years of specialisation in personal insolvency, I can confidently state that no two cases are ever alike. The causes of personal insolvency are diverse and often complex. The Insolvency Service notes that “only a relatively small number of cases have any material assets or show evidence of misconduct.”
Given that my practice predominantly involves contentious matters, often involving fraud or deliberate asset diversion, that comment does not reflect my experience.
I recognise however that my experience is not representative of the broader landscape. It is, by nature, skewed toward that minority of more problematic cases.
Insolvency Services report findings
Overall, the initial commentary offers a balanced and thoughtful assessment of the challenges inherent in the current formal personal insolvency procedures. It rightly acknowledges that there is no simple or immediate solution.
It is also worth noting that Debt Relief Orders now significantly outnumber Bankruptcy filings, indicating that most individuals in financial distress have debts under £50,000 and possess minimal or no assets.
The Insolvency Service has rightly emphasised that the regime should “concentrate first and foremost on the process of debt relief,” while also cautioning that “pursuing the debtor’s rights alone will lead to an unworkable insolvency system.” Striking the right balance between the interests of creditors and debtors is essential.
Creditors must have confidence that those with the means to repay will do so, while debtors with no realistic ability to contribute should be afforded a genuine opportunity for a fresh start.
The Insolvency Service is currently exploring the potential of a single-entry system, whereby all debtors would first receive professional debt advice and be appropriately directed to the most suitable solution.
Concerns persist around the consumer IVA regime, where individuals are frequently placed into IVAs that are neither appropriate nor sustainable and Bankruptcy or a Debt Relief Order would have been more suitable alternatives.
Breathing Space registrations are increasing (there were 7,684 Breathing Space registrations in September 2025 , 12% higher than in September 2024), which suggests that individuals are actively seeking advice in relation to the options available to them.
As personal insolvency processes continue to evolve, reform must be both principled and practical. The Insolvency Service’s commitment to a balanced, evidence led approach is encouraging.
Ensuring that debt relief mechanisms are accessible, proportionate, and resistant to misuse is not just a technical challenge, it’s a societal imperative.
