The annual bankruptcy statistics from the Department of Constitutional Affairs (DCA) show an alarming 38% increase in people voluntarily declaring themselves bankrupt.

During 2005, 36,897 people voluntarily applied for bankruptcy at the County and High Courts in England and Wales. This contrasts to just 26,776 people making a voluntary petition during 2004.

These figures refer to people who declare themselves as insolvent, meaning that they have debts which they are unable to pay.

A further 20,777 people were declared bankrupt by their lenders, bringing the total number of personal bankruptcies to 57,764 for 2005.

Personal bankruptcy is being seen by many as increasingly attractive following recent changes in the law that mean that people can be discharged from their bankruptcy after 12 months. Upon their discharge, all debts are cleared and the debtor can effectively make a fresh start.

When a person is declared bankrupt, all of their non essential possessions become property of the Official Receiver who is responsible for selling them in order to make payments to creditors. Bankrupts are under special restrictions for the period of their bankruptcy which are removed once the Official Receiver has completed his work and the bankrupt discharged.

References

Bankruptcy Statistics published by the Department of Constitutional Affairs

Guide to Bankruptcy from the Insolvency Service