Yesterday, official statistics brought forward the fact that over 33,000 people were declared insolvent during the second quarter of the year, the highest number ever recorded!

It was specified by the Insolvency Service that over the three months to the end of June, 33,073 people in England and Wales became insolvent, which comes as a 27 per cent increase on the same period last year.

"The steep increase - the total was 9 per cent up on the first three months of the year - reflects continued rises in unemployment as the recession continues, as well as the reluctance of banks and other financial institutions to lend to individuals who are struggling with their finances," said the Insolvency Service.

The second quarter of the year saw approximately 19,000 people being declared bankrupt, which was 15 per cent more than in the same period of 2008. Furthermore, 12,000 people entered into individual voluntary arrangements (IVAs) - agreements with creditors that fall short of full-scale bankruptcy - increasing the figures by 27 per cent on last year.

Other than this, debt relief orders, a new type of insolvency agreement introduced in April for those with relatively small amounts of borrowing, were signed by 2,000 people.

A warning forwarded by the Insolvency experts declared that there would be a tremendous rise in number of people affected, due to the combination of rising unemployment and the lack of stigma attached to options such as IVAs and debt relief orders.

"The dramatic increase in insolvencies comes as the Treasury Select Committee warns that mortgage lenders, regulators and the Government must do more to help borrowers finding it difficult to stay on top of home loan repayments," said a source.