The most recent figures from the Department for Trade and Industry show that 12,256 people went bankrupt in the third quarter of 2005 � an increase of 32%.
Many think bankruptcy is an easy way out of serious debt since it became possible to be discharged in under a year thanks to the 2002 Enterprise Act.
But a bankrupt is still restricted from borrowing �250 or more without informing the creditors of their situation. They are also prohibited from many business activities during bankruptcy and have the details of their situation published in the press.
But an IVA, undertaken by an insolvency practitioner, avoids these pitfalls.
An Individual Voluntary Arrangement is specifically designed for someone with debts of �15,000 or more as a means of dealing with the problem whilst avoiding bankruptcy.
A creditors' meeting is held to agree the details of the IVA. If 75% of the creditors vote in favour of the terms, then the IVA can go ahead.
Under these negotiated terms, a large chunk of the debt can be written off straight away, often more than half.
To pay off the remaining portion of the debt, a programme of monthly payments is devised according to what the debtor can afford.
Providing these regular payments are met and the terms of the agreement are abided by, an IVA can take someone from 'chronic debt' to 'no debt' in five years or less.
Nobody would pretend that being in the situation of serious debt is easy to get out of, or that an IVA is an easy solution, but in many cases it can prove less traumatic and disruptive than bankruptcy.