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This was an increase of 2.0 per cent on the previous quarter and an increase of 4.0 per cent on the same period a year ago.

This was made up of 1,085 compulsory liquidations, a decrease of 6.6 per cent on the previous quarter and a decrease of 22.0 per cent on the corresponding quarter of the previous year, and 2,125 creditors voluntary liquidations, an increase of 7.1 per cent on the previous quarter and an increase of 25.4 per cent on the corresponding quarter of the previous year.

In the twelve months ending Q1 2008, 0.6 per cent of active companies went into liquidation, the same as the previous quarter and the corresponding quarter of 2006.

The Insolvency Service reported 9,614 IVAs and 15,651 bankruptcies.

According to price comparison and switching service uSwitch.com, individual insolvencies could reach 101,056 by the end of the year.

For these people, insolvency means they have already reached financial stalemate. For others, the current economic climate in the UK is quickly pushing them towards this fate.

Today alone, a further 292 people will fall victim to insolvency today and 74 homes will be repossessed.

Consumer debt has now reached a staggering £1.4 trillion, a figure that is increasing by £1 million every five minutes, and uSwitch.com says it is clear that consumers are struggling to make ends meet.

The credit crunch is not the only problem facing consumers. The cost of living has shot up by 9 per cent, more than double the average salary increase of just 3.4 per cent across the UK, which leads to 5 million consumers spending more than they earn every month.

Consumers are facing prices hikes from every angle with annual energy bills (up 13 per cent or £1,114), food (up 11 per cent or £324 a year) and mortgages (up 9 per cent or £1,020 a year) and most recently petrol prices up by 25 per cent to 109.8p per litre.

Ann Robinson, director of consumer policy at price comparison and switching service uSwitch.com, says it is worrying that so many people are resorting to individual insolvencies, be it an IVA or bankruptcy, to resolve their personal debt problems.

She points out that these measure should always be the last resort for anyone with financial problems as they have a very serious impact on people's credit histories and their ability to borrow in the future.

In the case of bankruptcy, it could also impact on employment prospects.

"At the moment, consumers are being hit from every angle with price hikes across all areas from energy to mortgages right down to a 25 per cent increase in the cost of petrol. This may be making many people feel that their finances are simply out of control. If people find themselves in financial difficulty the worst thing they can do is ignore the problem and hope it goes away. It won't,” she adds.

Banks have a duty to help people in financial hardship and free debt advice is readily available from organisations such as the Consumer Credit Counselling Service, National Debtline and Citizen's Advice.

“I would strongly urge people to start taking action before they reach financial breaking point,” Robinson says.

There were 25,264 individual insolvencies in England and Wales in the first quarter of 2008 on a seasonally adjusted basis.

This was an increase of 1.7 per cent on the previous quarter and a decrease of 13.2 per cent on the same period a year ago.

This was made up of 15,651 bankruptcies, an increase of 0.1 per cent on the previous quarter and a decrease of 6.8 per cent on the corresponding quarter of the previous year, and 9,614 Individual Voluntary Arrangements (IVAs), an increase of 4.3 per cent on the previous quarter and a decrease of 22.0 per cent on the corresponding quarter of the previous year.

For bankruptcy orders there has been a pronounced shift towards debtor's petition bankruptcies and away from creditor's petitions in recent years.

By the first quarter of 2008, 84 per cent were made on the petition of the debtor.

The percentage of bankruptcy orders involving trading debts (self-employed bankruptcies) has fallen from 61 per cent in 1995 to 11 per cent in 2007 (first quarter 2008 figures for trading-related bankruptcies are not yet available).

It should be noted, however, that figures for 2007 are based on a revised classification and are not entirely consistent with earlier years’ figures.

Related articles

• Corporate insolvencies at record level
• First quarter sees leap in failures
• Report reveals tough year ahead for UK organisations
• UK corporate insolvencies forecast to rise by 3%
• Business failures set to reach five year high

Related links

• Insolvency Service
• uSwitch.com