Economic Pressures and Renewed Borrower Confidence: Aryza’s Insights on Q3 2025 Insolvency and Lending Trends
Aryza is pleased to share its analysis of recent trends in the individual and company insolvency market in England, Wales, and Northern Ireland from July to September 2025, based on the latest data released by the Insolvency Service.
Personal Insolvency
The total number of individual insolvencies in the third quarter of 2025 reached 32,964, with July seeing 10,515, comparable to the levels seen at this time last year. This consisted of 5,915 individual voluntary arrangements (IVAs), 599 bankruptcies, and 4,001 debt relief orders (DROs), with DROs remaining at a similar the record high levels seen since April 2024.
For August, 11,348 individuals entered insolvency, with 622 bankruptcies, 6,487 IVAs and 4,239 DROs recorded. This month, the number of DROs hit a record high in the monthly series since their introduction in 2009, surpassing the previous peak of 4,191 recorded in June 2024. IVA numbers were also higher than both the average monthly number seen in 2024 and the first seven months of 2025.
In September, 11,101 people entered insolvency, 7% higher than this time last year, made up of 622 bankruptcies, 6,494 IVAs, and 3,985 DROs.
As Aryza’s latest research showed, problem debt is complex, isolating and stigmatising. The daily challenges faced by individuals, from job loss to ill health and rising living costs, mean statutory debt solutions are a vital tool for those who need protection and debt relief from their creditors, enabling thousands of people to enter sustainable repayment plans, become debt-free, or receive an immediate debt relief write-off.
Richard Haymes, Associate Director of Policy and External Relations at Aryza, commented:
“The number of new IVAs continues to rise due to providers refine their customer acquisition models following the FCA’s debt packager ban and the update of the IVA Protocol. The revised Protocol has simplified access for customers with home equity by amending eligibility criteria and streamlining requirements. We expect new IVA volumes to continue to rise through Q4 2025 and Q1 2026.”
“New DRO volumes reached record levels in August, 77% higher than the long-term (2015–2025) monthly average of 2,252. Over the past 12 months, 45,942 DROs have been registered. This growth is largely attributed to the removal of the £90 application fee and increased activity from Money and Pensions Service–funded DRO hubs.”
Corporate Insolvency
In the third quarter of 2025, corporate insolvencies totalled 6,129, compared to 6,031 in 2024.
For July, there were 2,081 insolvencies, a similar number to those in the same period in 2024. This was made up of 1,583 creditors’ voluntary liquidations (CVLs), 147 administrations, 12 company voluntary arrangements (CVAs), and 339 compulsory liquidations.
August saw 2,048 insolvencies, which is 6% higher than the numbers we saw in August 2024. This consisted of 1,600 CVLs, 121 administrations, 16 CVAs, and 311 compulsory liquidations, which exceeded the monthly numbers in 2024.
When looking at the statistics for September, 2,000 entered insolvency, comprising 1,578 CVLs, 124 administrations, 17 CVAs, and 281 compulsory liquidations.
Richard Haymes, commented:
“The number of corporate insolvencies fell slightly in the third quarter of 2025, down 3% to 6,129. However, many businesses continue to face significant pressures. Global trade challenges, rising raw material costs, and ongoing recruitment difficulties remain key concerns.
“The manufacturing and hospitality sectors are particularly affected, with both struggling to fill vacancies, an issue linked to post-Brexit labour shortages and immigration constraints. According to the British Chambers of Commerce, 73% of recruiting firms reported difficulties hiring earlier this year. These sectors also continue to experience high insolvency levels, accounting for 8% and 14% of all cases respectively over the past 12 months.”
“As challenging trading conditions persist, creditors are also taking a more proactive approach to managing their exposure and recovering debts, including the government. PwC analysis shows that HMRC was responsible for 58% of all winding-up petitions in September, as it seeks to recover unpaid liabilities such as National Insurance Contributions and other employee-related taxes.”
Lending Market Insights
From July to September 2025, lending activity showed renewed strength in credit markets, suggesting that both consumers and businesses are becoming more confident in their financial outlook. This upward trend indicates a slow increase in borrowing appetite, aided by improving income stability, easing inflation, and expectations of lower interest rates. The strong September figure also points to seasonal growth in mortgage lending and business investment as year-end approaches.
Net lending to households and private sector companies was £7.7 billion in July, rose to £10 billion in August, and surged to £19.5 billion in September.
Net mortgage lending decreased by £0.9 billion to £4.5 billion in July, compared to £5.4 billion in July. However, consumer credit net borrowing rose slightly to £1.6 billion, and alternative forms of consumer credit all increased from June.
In August, net mortgage lending decreased by £0.2 billion to £4.3 billion, following the previous fall in July. Consumer credit net borrowing remained flat at £1.7 billion in August, while the use of other forms of consumer credit increased slightly, to £1.0 billion from £0.9 billion.
September showed that net mortgage lending rose by £1.2 billion to £5.5 billion in September, the highest since March 2025. Consumer credit net borrowing decreased slightly from August to £1.5 billion in September, and net borrowing through alternative forms of consumer credit also declined to £0.8 billion.
Aryza is committed to providing ongoing quarterly analysis and commentary on the personal and corporate insolvency market, helping stakeholders navigate this evolving landscape effectively, and ensuring they are well informed about the latest trends and developments.