Over 20,000 people became insolvent in the last 3 months of 2005, according to new government figures, representing a rise of 57% over the same period in 2004. In total, 70,000 insolvencies were recorded over the year.

Of these, around two thirds were declared bankrupt, either voluntarily or by creditor court action, with the remaining third opting for Individual Voluntary Arrangements (IVAs).

Record levels of personal debt are being put behind the record figures, along with recent changes to the bankruptcy laws which made it simpler to declare oneself bankrupt and shortened the typical length of a bankruptcy period before discharge.

While bankruptcy has been widely touted as an easy option for people in debt, the consequences can be servere and can last long after the official discharge, and most debt experts advise only applying for bankruptcy when there really is no alternative.

Other recent figures also show a sharp rise in home repossession orders, which suggests that indebtedness is still a huge problem for many, and one that seems to be getting worse with even greater numbers of insolvencies and repossessions predicted for 2006.

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