Latest government figures show a record 53,114 people in England and Wales chose to go bankrupt last year after being unable to keep up with their debts
A total of people petitioned to go bankrupt in 2007, as opposed to having their creditors call for them to go bankrupt, according to the Ministry of Justice.
This is just under 1% higher than the number of people who went bankrupt in 2006, but it was a 44% jump on the total for 2005 and nearly double 2004's level.
However, the number of people requesting bankruptcy fell as the year went on, from 15,154 in the first quarter to 11,703 in the last three months of the year, and the figures for the fourth quarter were also down 10% on the same period of the previous year.
Despite fears that the credit crunch would take its toll on businesses, the number of companies wound-up over the year was also down, to a total of 11,791.
However, industry experts suggest that the fall, and the recent slowdown in the number of borrowers seeking to go bankrupt, are the calm before the storm.
Liberal Democrat Treasury spokesman, Vince Cable, said: "For many people it seems that voluntarily filing for bankruptcy is the only way to shed debts they simply cannot pay.
"As the credit crunch further impacts on the cost of borrowing, we need to wake up to the very real possibility of mass bankruptcy and repossession across the country.
"It is critical that we act now to find ways to help people in severe financial difficulties so that an economic slowdown doesn't turn into a crash."
Mark Sands, director of personal insolvency at KPMG, said: "We think this is a temporary respite and we will see the bankruptcy numbers go back up in 2008.".
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