This year we could have 150,000 people declaring themselves insolvent in England and Wales, according to Government’s Insolvency Service. This personal insolvency will either be in the form of bankruptcy or an Individual Voluntary Arrangement (IVA).

The numbers for last year were lower – 104,573 and 2004 had the lowest amount of bankruptcies and individual voluntary arrangements – 46,650.

People who have limited financial knowledge and even fewer resources, are most vulnerable: they are in debt but are forced to spend on credit to see to their everyday needs.

Our debt is reaching high levels

KPMG, one of the largest professional services, recently conducted research revealing creditors may have wrote off more than £1.1bn in 2008. The average IVA proposes to repay £18,164, which is a 38 per cent debt repayment of the average debt of £47,800.

There is a slight difference between these new figures and the figures from 2007. Most of these debts are from credit cards and loans that pay for day-to-day expenses. KPMG estimates that about 2,500 people received IVA agreements in 2008 despite their debt exceeding £100,000.

KPMG’s director of personal insolvency, Mark Sands, said that many people are unable to make repayments on their debt; the amount of money they owe is just too big. He also said that formal

New plan to help debtors

The government will introduce Debt Relief Orders in April 2009. These should benefit debtors who have debts of less than £15,000 and who have few assets to avoid bankruptcy.