The number of people in Britain declaring themselves insolvent or bankrupt has risen compared with this time last year.

During the second quarter of 2006, 26,000 people became insolvent or bankrupt in England and Wales, with two-thirds of these declaring themselves bankrupt and the remainder taking out Individual Voluntary Arrangements (IVA).

While bankruptcies were up 33 per cent on last year's figures, IVAs were up by 153 per cent compared to the same time in 2005, government figures show.

The rise in popularity of IVAs reflects the fact that many people have borrowed to their limits, revealed a chief UK and European economist from Global Insight, while a lot of consumers have been trying to improve their balance sheets.

A recent change in the law which made it more attractive for consumers to declare themselves insolvent to deal with debts has also played a part in the boom in insolvencies.

With rising unemployment and utility bills, as well as the recent interest rates rise further stretching loan and mortgage repayments, individual insolvencies are likely to climb in the coming months, they predicted.

The Debt Advice Bureau identified a tendency towards a lack of personal responsibility regarding debts as a contributing factor.

"You often see in the under 30's less of a willingness to give up certain types of expenditure," said a debt counsellor.

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