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The number of people applying for bankruptcy increased by 7% during the third quarter of the year, figures showed today, offering further evidence of the impact of the financial downturn on consumers.
A total of 13,653 people in England and Wales petitioned for bankruptcy in the three months to the end of September, 7% more than during the same period of 2007 and 1% more than during the previous quarter.
The figure was also the second highest recorded by the Ministry of Justice since it began collecting data in its current format in 1995.
It was the third quarter in a row that the number of people petitioning for bankruptcy themselves has risen, after it fell for most of 2007.
Over the same period creditors took out 5,499 bankruptcy petitions against borrowers, 2% less than in the second quarter of this year but 10% more than between July and September 2007.
The number of companies facing winding up petitions jumped by 9% over the quarter and at 3,184 was 13.4% higher than in the same period last year.
The figures from the Ministry of Justice show more than 40,000 people declared themselves bankrupt in the first nine months of the year, which is roughly in line with last year's figure.
However, experts suggest more people will be forced to petition for bankruptcy over the coming months as they are squeezed by a combination of higher living costs and a lack of cheap credit.
Lenders have also been cracking down on individual voluntary arrangements (IVAs), where debtors enter into a formal arrangement to pay off a percentage of their debts, with many raising the amount they are willing to accept as a repayment.
Michael Thomas, founder of website Debtwizard.com, said this had already had an impact on bankruptcy figures.
"Borrowers are not getting support from creditors and some people have no alternative but to go for bankruptcy," he said.
Last week, the Insolvency Service said 27,087 people had been declared insolvent in the third quarter of the year.
Its figures include IVAs as well as bankruptcies and show the number of people who have formally been declared insolvent, while the Ministry of Justice's figures show the number of bankruptcy petitions lodged with courts.
Both sets of figures are likely to increase next year as lenders' continued reticence to offer consolidation loans to borrowers, and rising unemployment push more people into financial difficulties.
Howard Archer, chief UK economist at HIS Global Insight, said: "The many people who had to stretch themselves to the absolute limit to get into the housing market in recent years are particularly vulnerable.
"Obviously the more that house prices fall, the more people will be trapped with negative equity. And it is those people with the weakest credit ratings that are being hardest hit by tighter lending conditions and more punitive terms."
Archer said the marked rise in the number of companies being wound up was "a clear taste of things to come."
He added: "The sharp economic slowdown will generally hit companies' sales and pricing power hard, largely outweighing the reduction to costs coming from markedly lower energy and commodity prices."
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