The Insolvency Service has declared that during the three months to the end of June, a total of 33,073 people were declared insolvent, which is 27.4 per cent more than during the same period a year earlier.

This indicates that, presently, the insolvency numbers are at their highest level since records began in 1960, and it is being predicted by experts that since unemployment is on rise and people can't pay their bills, the worse is yet to come!

Apart from this, a year-on-year rise of 39.1% was seen in the number of companies that collapsed, putting the figures at 5,055 in the three months to the end of June.

The combination of rising unemployment and unmanageable debt was described as "the perfect storm" by Alan Tomlinson, of insolvency practitioners Tomlinsons.

He continued: "The individual insolvencies consisted of 18,870 bankruptcies - which were up 15.3 per cent on the same period a year ago and 12,225 of its less stringent form, Individual Voluntary Arrangements (IVAs) - which were up 27.4 per cent on the same period in 2008."

While a bankruptcy includes a formal court order where assets are sold to pay creditors, an IVA is an arrangement that is entered into with those owed money.