New regime 'contributes' to soaring bankruptcy

Some 9,060 people were declared bankrupt in the second quarter of this year, 30% more than in the corresponding period for 2003.

Steve Treharne, head of personal insolvency at KPMG, suggested the increase was at least partly driven by the new bankruptcy regime introduced in April.

'It looks like the new Enterprise Act provisions, whereby most bankrupts can now be discharged within one year, have also contributed to this rise, suggesting that bankruptcy is now seen as a more acceptable way of dealing with debt difficulties,' he said.

But the insolvency service rejected this, claiming economic conditions were the sole determinant. A spokeswoman said: 'The bankruptcy system is not softer. The legislation did not have an effect on the number of people going into bankruptcy.'

In contrast to personal insolvency, company insolvencies fell by 18%. In a sign that the Enterprise Act is taking effect, administrations rocketed by 135% while liquidations and receiverships hit a 10-year low.