Although declaring yourself bankrupt is a way of resolving your debt issues, it should be avoided if at all possible.

Bankruptcy has many disadvantages and penalties and as a result it should not be entered into lightly. Aside from the obvious stigmas and disqualifications, it can affect your ability to obtain any sort of credit for a number of years, even after you have been discharged.

In 2004, the bankruptcy laws in the UK changed in a way that made it easier for people to file for bankruptcy. They did this by reducing the discharge period from three years to one year.

As a result of this and other factors, bankruptcy rates have been growing at an alarming rate over recent years. In 2004, nearly 36,000 people filed for bankruptcy. By 2005, this figure had risen to a staggering 70,000- nearly double the previous year