Government figures show that debt levels drove 24,000 to become bankrupt or take out an IVA to manage their debt.
Laws introduced in 2002 liberalised the bankruptcy regime, making it easier for people to turn to bankruptcy and IVAs as a debt management scheme. The increase in debt management organisations is also likely to have contributed to the increase as people become more aware of ways they can get out of debt.
Because of this, 86 per cent more people declared themselves bankrupt last year while only 16 per cent more were forced to do so by creditors.
According to data released last week by the Insolvency Service, IVAs – an agreement that freezes interest on debts in exchange for a repayment each month – also soared in popularity, rising 151 per cent.
With bankruptcy levels rising, the amount of people who could lose their home and possessions due to debt would also increase, meaning that debt management action should be taken early to avoid this happening.