Controversial

Significantly, the insolvency figures show that the proportion of people taking out IVAs has risen relative to those going bankrupt.

In total, 15,416 people went bankrupt between July and September. At the same time, 12,228 people entered into IVAs.

A year ago, just over 12,000 went bankrupt and fewer than 6,000 entered into an IVA.

The sharp rise in IVAs has been controversial.

IVAs are heavily marketed by providers, who make money from acting as go-betweens for lenders and borrowers.

Some debt charities have criticised IVA providers for marketing them to people who would be better off either going bankrupt or coming to an informal arrangement with creditors.

"If the current trend continues, the number of IVAs will overtake the number of bankruptcy next year and that is an indication that the IVA solution is becoming more popular than is good for people," said Malcolm Hurlston, chairman of the Consumer Credit Counselling Service (CCCS), a debt charity.

Lenders, too, are concerned at the rise in IVAs.

"Several lending institutions have raised concerns at these record levels and have commented on the limited extent to which the advice sector is regulated," Stephen Treharne, head of personal insolvency at accountancy firm KPMG, told BBC News.

In response, a leading IVA provider, Thomas Charles, told BBC News that they were reacting to a real consumer need and not pushing the IVA concept inappropriately.

"If somebody in debt talks to a debt advisory firm, they should be given a full understanding of all the options - including bankruptcy, IVAs and informal arrangement plans," said James Falla, managing director of Thomas Charles.

"The key is, advice has to be measured, correct and well-targeted. Nobody can enter an IVA without the acceptance of the creditors and that ultimately is the backstop," he added.

Rate rise

Problems for debtors may just be about to get worse.

Next week, the Bank of England will decide whether UK interest rates should rise, thereby pushing mortgage repayments higher.

Most analysts predict that an interest rate rise from 4.75% to 5% is on the cards.

"I fear that more consumers will fail to meet their minimum monthly credit card and loan payments and will have to consider taking formal steps to deal with their over-indebtedness," Mr Treharne said.

Have you been affected by issues covered in this story? Have you ever been forced to declare yourself insolvent?

Some comments....

I went bankrupt in July this year and I can tell you it is such a huge burden off my mind. I had been in trouble for over a year. I did consider an IVA but I couldn't afford to make any monthly payments. Bankruptcy is a good idea if you don't have a lot or no assets to speak of. Creditors are still using tactics that are very close to harassment. I did read about one man who killed himself over it. My advice is to speak to an independent financial adviser not one of these debt management firms which I think are bad news. My advisor was very knowledgeable and was up to date with all the law changes unlike the CAB who give out incorrect out of date information.
Melanie, London, UK

I work for a mobile phone company dealing with insolvency etc. We have seen a massive rise in the number of people that have gone insolvent over the last year. It seems to be the thing to do! Rack up a load of debit and then write it off, no one seems bothered any more, frankly it's shocking.
Philip, Darlington

Ask yourself... would YOU lend money to someone you knew would have difficulty paying it back? Probably not. But this exactly what creditors are doing. I am a bankrupt and I STILL get letters offering me credit from the SAME companies I owed thousands of pounds to! They are throwing money at the consumer, knowing that some will never be able to pay it all back. But creditors know they will make a lot of money from those who will.
Leigh, Plymouth

We have been in an informal arrangement with a debt management company for the last 2 years. We have recently found out that over half of our debts have grown and as a result we are now facing bankruptcy. If someone had advised us on this 2 years ago we would now be discharged and on our way to finding our feet again. Instead we have more or less wasted a load of money on this informal arrangement that would have been better served helping us to recover our financial security and paying to go bankrupt in the first place.
Karen Vincent, Guildford