The number of people asking for breathing space from their debts under rules brought in during the Covid-19 pandemic jumped by 25% in 2023 compared with the previous year.
Across England and Wales, there were 88,390 registered debt relief breaks in 2023, up from 70,772 in 2022.
The government established rules in 2021 that gave people who fall behind with their bills the ability to apply for a payment holiday.
Tens of thousands of households fell into arrears on their rent, utility bills and credit card payments after the pandemic struck and the Debt Respite Scheme allowed many of them to avoid bankruptcy.
A standard breathing space is available to people with problem debt and gives legal protections from creditor action for up to 60 days.
A mental health crisis breathing space is available to someone who is receiving treatment for a mental health issue and lasts as long as the treatment, plus 30 days.
The Insolvency Service said the total in 2023 comprised 86,928 standard and 1,462 mental health breathing space registrations, compared with 69,556 and 1,216 respectively in 2022.
Debt advice charities said the scheme could account for the fall in personal insolvencies during 2023 to a level last seen in 2017. There were 103,454 personal insolvencies in 2023, down from 118,766 in 2022.
Separate figures from the Bank of England for December showed a fall in consumer credit to £1.2bn from £2.1bn the previous month, indicating that households were able to rein in their use of high-priced loans, and especially credit cards, ahead of the Christmas sales period. Borrowing on credit cards fell to £300m in December from £1bn in November.
However, the debt advice charity StepChange said polling suggested that 40% of people in the UK – about 22 million people – entered the new year struggling to keep up with bills and credit commitments.
Its spokesperson Richard Lane said: “While it’s encouraging to see consumer borrowing fall – particularly in December when Christmas spending is at its peak – the fact remains there are still millions of people struggling to meet the most essential of financial commitments and they are turning to borrowing as a result.
“Our research has found that one in eight people has borrowed to keep up with essential payments in the past 12 months, and with everyday costs like energy bills and groceries still soaring, we can expect to see more and more people turn to borrowing to make ends meet.”
The Insolvency Service said the number of company insolvencies across England and Wales last year was the highest since 1993, with 25,158 registered company insolvencies in 2023.
Although company insolvencies were at a 30-year high in 2023, the number of firms on the Companies House register has increased over time, so the rate of businesses going insolvent in 2023 compared with active companies remained much lower than a peak seen during the 2008-09 recession, the service said.
Nicky Fisher, the president of R3, the UK’s insolvency and restructuring trade body, said high interest rates and a harsh business environment accounted for the “rising tide of corporate insolvencies”.
She said: “A combination of increased costs, cautious spending, creditor pressure, and the post-pandemic hangover have seen more businesses enter a corporate insolvency process to help address their financial issues than last year.
“Unless the economic picture improves, costs come down and people start spending, it seems likely that insolvency numbers will remain high this year.”
Earlier this month, the insolvency practitioner Begbies Traynor said it estimated more than 47,000 UK companies were on the brink of collapse after a 25% jump in the number of businesses facing “critical” financial distress in the final three months of 2023.
Its “red flag” report found that the construction and property sectors accounted for 30% of all businesses facing critical financial distress, after a sharp downturn in the building industry last year.