There is no doubt that over the past couple of years, since the onset of the global financial crisis, many families have been driven to financial ruin, and matters have been made even worse over the past year, with many families being hit with redundancy following the onset of the recession.

For many families these dire situations have led to severe difficulties in keeping up with debt repayments on unsecured finance such as credit cards and loans, and for some the only option available has been to consider becoming insolvent.

Recent research has shown that there has been a stark rise in personal insolvencies in the UK, and during the first quarter of this year personal insolvencies hit a record high.

Worse still, a report has recently been released predicting that the figures for the second quarter, which are due for release shortly, will see personal insolvency figures reaching fresh highs, as they are expected to exceed thirty thousand for the quarter for the first time ever.

Personal insolvencies include bankruptcy and IVAs, which are Individual Voluntary Agreements, and a rising number of people have been turning to these measures in order to cope with their unmanageable debt levels.

Figures have shown that the number of bankruptcies since the start of this year have hit nearly 42,000, and this means that one person is filing for bankruptcy every six seconds. The number of IVAs since the start of the year came in at almost 23,000, equating to five people entering into one of these arrangements every hour.

One official that carried out research into personal insolvency levels stated: “The figures for the first quarter of 2009 showed record highs of personal insolvencies, and it is likely this will again be the case when the latest statistics are announced.”

He added that personal insolvency levels were likely to increase, stating: “They are proving popular with those struggling with severe burdens and we are likely to see increasing numbers of people making use of these to address their financial issues.”

Whilst personal insolvency may be the only solution for some households in the current financial climate, industry experts have warned that they should be considered a last resort rather than a way to escape debt, and have urged consumers to consider the long term financial effects of becoming insolvent.

Some experts involved in the research offered some tips and advice for consumes that wanted to try and avoid insolvency at all costs, some of which are outlined below:

One of the tips given by experts is to ensure that you have a regular financial healthcheck, and this includes checking your credit report on a regular basis as well as getting profession advice whenever necessary, which is usually available for free. Budgeting is another important aspect of staying in the black, and consumers are urged to set themselves a realistic and sensible budget and ensure that they stick to it.

Sensible financial management was also highlighted, with experts suggesting that consumers make cutbacks on luxuries, and ensure that they prioritise on necessary outgoings before considering spending money on things that are deemed unnecessary.

Finally, experts advised that wherever possible consumers should try and stick to cash for their spending, as credit card use can quickly spiral out of control and can also come with high fees and charges attached.

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