The number of debt-laden Britons forced into bankruptcy is soaring to the highest levels since records began half a century ago as surging unemployment and the housing slump inflict a heavy toll on hard-up families.

Experts said a record 150,000 or more people could go bankrupt or personally insolvent this year – shattering a previous high of 107,000 in 2006 – as Britain’s worst postwar recession intensifies pressure on struggling families’ pockets.

Bleak predictions of escalating financial casualties from the slump came after official figures showed the number of individuals going bankrupt in England and Wales leapt to 20,446 in the first quarter. This marked a 6 per cent rise on the final quarter of 2008 and a jump of more than 23 per cent from the same period last year.

The number of people in England and Wales becoming insolvent, which includes full bankruptcy and those taking out individual voluntary agreements (IVAs), soared to 30,253 – up by 18 per cent from a year earlier.

The blight of bankruptcy was even more severe in Scotland, where personal insolvencies surged by 71 per cent to 5,693 in the first quarter (Q1).

Across the UK, personal insolvencies were almost 29 per cent higher, at a grim total of 36,404 in Q1.

About two thirds of those becoming insolvent are going into full bankruptcy, with the remaining third taking out IVAs, under which interest on debts is frozen in exchange for a set amount being repaid each month.

In England and Wales, the past quarter brought almost 10,000 IVAs in addition to the 20,446 bankruptcies. Most personal insolvencies are being initiated by the individuals affected, while 13 per cent involve trading debts run up by the self-employed.

Economists and insolvency specialists issued warnings that worse still was likely to come as the recession bites deeper. In past recessions, numbers of personal bankruptcies and of companies going bust have continued to soar even after the worst of the recession has passed and long after the downturn was officially over.

Mark Sands, director of personal insolvency at KPMG, the accounting group, said that the bankruptcy blight was aggravated as personal debt remained at record levels even after months of the credit crunch and as households raised their savings in response to recession.

“Combined with the highest unemployment levels since 1997 and rapidly increasing negative equity, it is no surprise that we are seeing the highest levels of personal insolvencies since records began,” Mr Sands said.

Mr Sands added that debt relief orders, a new alternative to bankruptcy, in addition to IVAs, intended for people with debt of less than £15,000 and little spare income, would further inflate personal insolvency numbers. The orders became available last month and will be included in statistics from the second quarter.

The number of businesses going bust also leapt in the first quarter, with company liquidations up by 56 per cent from a year earlier to a seasonally adjusted total of 4,941.

In addition to that, a further 1,783 businesses became insolvent, with 316 going into receivership, 1,311 entering administration, and 156 so-called company voluntary arrangements. The total of these additional businesses going bust was also up by 54 per cent from a year earlier.

Case study: debt relief

Nikki Mansell, 26, has struggled with credit card and personal loan debt since she was a student. As a civilian support officer for Bedfordshire Police, insolvency will prevent her being promoted without external vetting. It also means she will not be able to apply for positions that require her to handle sensitive data. She began proceedings in December when faced with unsecured debts of £38,000. Ms Mansell said: “When I tell people my position I am surprised at how many have similar problems. I feel a huge sense of relief having got it all out in the open.”

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