The number of people taking “breathing space” from their debt problems has soared by more than a third year-on-year, official data shows.

There were 23,179 registrations for the relief in the first three months of 2023, up 34% from the same period in 2022, according to Insolvency Service figures.

Of this total, 22,770 were standard breathing space registrations and 409 were made for mental health reasons.

Cost of living latest

The latest statistics come as the rate of inflation eased slightly but still remains above 10%, with food and drink costs at a 45-year high.

The scheme provides legal safeguards for people with problem debt, giving them time to get advice and plan for how they will settle their bills.

It protects people from their creditors for 60 days, with most interest and penalty charges frozen and enforcement action halted.

Because financial problems can be linked to mental health issues, the protections are also available for people receiving crisis treatment.

In these cases, it covers the duration of their care plus a further 30 days.

For the whole of last year, 70,546 registered breathing spaces were recorded, including 69,334 standard and 1,212 mental health registrations.

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People seeking the assistance need to speak to a debt adviser first, who will then make the application.

Those registering for breathing space may or may not end up entering a formal insolvency procedure.

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The figures, covering England and Wales, showed the number of people going financially insolvent was 2% lower in the first quarter of this year than in the final quarter of 2022.

The 29,017 personal insolvencies registered over the latest three month period was also 9% lower than the same quarter the previous year.

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The Insolvency Service also released company insolvency figures for England and Wales, which showed the number of firms going bust was 18% higher than in the first quarter of 2022 but 4% lower than the final three months of 2022.

There were 5,747 company insolvencies in total registered in the first quarter of 2023.

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