THE painful impact of the recession on Southampton has been laid bare by the latest official figures showing that the number of people declaring themselves bankrupt in the city has soared by nearly half.

Ministry of Justice statistics reveal 204 people petitioned for bankruptcy in the city in the first three months of the year – a rise of 44 per cent on the same period in 2008 and well above the national trend.

Nationally, the three months ending March 31 saw an increase of 33 per cent in the number of people making themselves bankrupt in England and Wales, compared to the same quarter of last year. At the same time there was also an increase in the use of Individual Voluntary Arrangements (IVAs) – which rose by 11 per cent compared to last year.

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The figures reveal that 17,606 people successfully petitioned the Court to bankrupt themselves and 9,807 agreed an IVA. Mark Sands, director of personal insolvency at accountants KPMG’s South Coast office in Southampton, said: “This means that a total of 27,413 people took the potentially life-changing step of placing themselves into personal insolvency. This proportion of people choosing to ‘jump before they were pushed’ represents an incredible 91 per cent of all personal insolvencies.

“Despite the credit crunch, levels of consumer debt in the system remain at record levels. 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. Whilst consumers will fight to keep their jobs and their family homes, for those who lose both there is often little reason for someone with debts and minimal assets not to declare themselves bankrupt.”

In April 2009 the government introduced Debt Relief Orders (DROs), which allow consumers with debts of less than £15,000, and minimal assets or surplus income, to write off their debts without entering into a full blown bankruptcy.

Mark Sands said: “We expect this new approach to increase the number of people using personal insolvency as the way to deal with their debts. In KPMG’s view, DROs, together with the expected increase in unemployment, are likely to lead to record levels of personal insolvency of more than 150,000 in 2009.”