by James Charles

More borrowers over the age of 45 are declaring themselves bankrupt than any other age group, as falling house prices and rising unemployment reduces their ability to manage debt, a leading accountant has warned.

Wilkins Kennedy released research today showing that 38 per cent of individuals who were declared bankrupt last year were over 45, while bankruptcy amongst the age group had more than doubled in the last five years, from 10,594 in 2004 to 23,767 last year.

Anthony Cork, director of Wilkins Kennedy, said: “During the property boom, people were borrowing against their houses to cash in on rising values. With the crash in prices, many people have no longer got the equity in their homes to rely on if they are made redundant or if their income falls.”

House prices have fallen more than 20 per cent since the peak of the market in 2007, pushing more than one million homeowners into negative equity - where a home loan that is worth more than their property - according to figures from the Council of Mortgage Lenders. Unemployment is also rising and economists expect it to hit 3 million by the end of the year.

Chris Tapp, of Credit Action, the debt charity, said: “A steep drop in income coupled with a sharp drop in house prices rapidly restricts the options that people have, leading to bankruptcy. Owning a property used to provide a buffer but that support isn’t available.”

The total number of bankruptcies has increased by 89 per cent over the last five years, according to figures from the Insolvency Service, from 35,700 in 2004 to 67,500 last year.

About 40 per cent of callers to the Consumer Credit Counselling Service (CCCS), the debt helpline, were aged between 40 and 59 last year.

The charity recently warned that a growing number of calls were from individuals over the age of 60. In 2006, 8 per cent of callers were over 60, compared to 10 per cent last year.

Frances Walker, of CCCS, said that clients who call the helpline are increasingly affluent and frequently homeowners.

“You would expect to have paid off all your debts as you reached the peak of your earning capacity. Increasingly, however, adults are finding it more difficult, with more pressure on their finances and a combination of factors leading to breaking point.”

The average adult owed £30,500 at the end of April, according to Credit Action, the debt charity. It said that adults aged 40 to 59 years old owed more than any other group, typically £33,144.

In April the Government introduced debt relief orders, a cheaper alternative to bankruptcy for low-income borrowers with minimal assets.