Creditors wrote off a record £1.4 billion of bad debt during 2006 as a result of individual voluntary arrangements.
Professional services firm KPMG estimated that this year saw around 110,000 people become insolvent, the first year the total has broken the 100,000 barrier.
Of those, around 45,000 people opted for an Individual Voluntary Arrangement (IVA) as opposed to bankruptcy, an increase of more than 100 per cent on the previous 12 months.
Steve Treharne, head of personal insolvency at KPMG, said: "The IVA was introduced 20 years ago to provide entrepreneurs with an alternative to bankruptcy.
"Typically the sorts of debts we have seen being dealt with by with IVAs in 2006 are personal loans, credit card balances and other forms of `buy now, pay later' unsecured loans.
"Most of the money is borrowed to meet current expenditure - including lifestyle items such as holidays - rather than to acquire assets or to fund a business.
Source: ITN News
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