There were 26,000 personal insolvencies between April and June this year, compared to just 15,600 last year, as more people struggle with debt, but Mr King said it was not a major economic problem yet.
“Debts would only become a problem [for the economy] if there were major problems with secured debt,” said Mr King following the publication of the Bank of England’s August 2006 Inflation Report.
According to the Office of National Statistics, bankruptcies and Individual Voluntary Arrangements (IVAs) have rocketed in the past year, with IVAs rising by over 150 per cent.
However, Mr King said that because 83 per cent of personal debt is secured, he did not think it was a problem for the “household sector as a whole”.
However, Andrew Smith, marketing director of ClearDebt, thought that the numbers of people choosing insolvency could be reaching a tipping point that might see the market rise rapidly enough to affect the economy.
He said: “Two years ago only one adult in 2,500 was choosing personal insolvency. If this year’s figures do exceed 100,000, then one adult in 500 will have chosen not to repay their debts.
“At this level much of the social stigma will have vanished and many may even be urged by peers to take this course.”