Although there has been a one per cent decrease in bankruptcies, there is still a "rough ride" ahead for those with debt issues, according to Grant Thornton.

Figures released by the Insolvency Service for the fourth quarter of 2007 also showed a decrease in individual voluntary arrangements (IVAs), which were down 8.2 per cent to 9,188.

Head of personal insolvency at Grant Thornton Mike Gerrard commented on the figures, suggesting that many in debt are simply not seeking help, whilst others had their IVA application rejected.

Mr Gerrard said: "People are being squeezed for their money and while some take on unmanageable debt needlessly – a greater majority are doing so to keep themselves afloat."

He added that the uptake of IVAs was likely to increase in 2008, as a new code will "make the IVA process more transparent".

Figures from Credit Action reveal that interest repayments in Britain are now at a record level, with £94.6 billion paid in 2007.