In the final three months of last year a record 13,000 people were declared insolvent, 35 per cent more than in the same period in 2003. Accountants say the upsurge is likely to continue as debts on credit cards and store cards mount and people take advantage of easier bankruptcy rules which mean that bankrupts can have their debts wiped out within as little as three months.

Previously it took three years during which time they could not borrow and were barred from many types of job. Three quarters of bankruptcy petitions filed last year were from debtors themselves, often acting under advice from local debt agencies or Citizens Advice Bureaux.

“We have seen the number of people choosing to go bankrupt increase because it is more socially acceptable,” said Malcolm Hurlston, chairman of the Consumer Credit Counselling Service, a debt charity funded by the banks.

“It is sensible for some people in high levels of debt if they do not own their own home. We are also seeing more older people who are no longer in the trading world choose bankruptcy.”

After several years of low interest rates, consumer debt recently passed £1,000 billion. A further £875 billion is owed on mortgages. However, there is as yet little evidence that rising interest rates on home loans have forced many families into insolvency.

Arrears of more than six months on mortgage payments are near to their lowest for 20 years and Halifax, the biggest mortgage lender, has calculated that the value of people’s houses averages 3.88 times their mortgage debts, one of the highest ratios on record.

Steve Treharne, insolvency partner at KPMG, said: “These statistics point to a new high level of bankruptcies becoming the norm rather than a one-off. If Britain follows the US trend, where bankruptcy rates per head are ten times British figures, we can expect increases to be greater still.”

Insolvency law changed in April as a result of the Enterprise Act. This was designed to make business failure less traumatic to encourage the rate of business start-ups. Business insolvencies remain relatively low but the new regime seems to have been adopted by consumers who have bought too much on credit and have few other assets to lose.

Mike Gerrard, insolvency partner at Grant Thornton accountants, said that individual voluntary arrangements (IVAs)were proving an even better alternative to bankruptcy. They allowed consumers to freeze their debts, usually keep their houses and pay off a proportion of what they owed over five years. He said that insolvencies could rise further if house prices fell and homeowners could not pay off other debts by remortgaging. Advice agencies in some of the most prosperous towns seem to be advocating bankruptcy as an easy way out.

In the final quarter of 2004, bankruptcy petitions in Cambridge and Bournemouth were nearly three times as high as in the final quarter of 2003. Petitions from the main towns of Hertfordshire more than doubled, as did requested bankruptcies in Guildford and Canterbury. In most of the Midlands and the North, as well as Greater London, increases were much smaller.

“The increase in bankruptcy levels suggests that the simplified approach is making the procedures more attractive,” Mr Treharne said. “As word spreads, more and more people are likely to take this route.”

HOW TO MAKE YOURSELF INSOLVENT

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