Rise in bankruptcy petitions

An 18 per cent rise in creditor's petitions for bankruptcy shows firms are getting tougher on debt, figures from the government suggest.

In the second quarter of 2008, there were 5,625 creditors' petitions for bankruptcy, an 18 per cent rise from last year.

If an individual creditor is owed more than £750, they can petition for the debtor to be made bankrupt.

Although the statistics do not show the actual number of bankruptcies during the quarter, the fact that the number of creditors taking the first step has increased signals a likely rise ahead.

Frances Walker from debt charity Consumer Credit Counselling Service said: "There are two problems.

"I think maybe creditors are getting a bit tougher, although bankruptcy is not a good outcome for them, but I think people like our clients who are on debt management plans and have started paying back their debts are facing problems because of rising household costs."

Government figures for the three months to June showed the number of people declared insolvent in England and Wales fell by 8.3 per cent compared to last year, surprising analysts who were expecting a rise.

However, Ms Walker confirmed that the number of calls to the charity's helpline have increased a lot in July and August.

This could mean there has been a lag behind the credit crunch, Ms Walker said.

The Office for National Statistics confirmed inflation rose to 4.4 per cent in July and the Bank of England believes it could hit five per cent before falling back to the two per cent target later next year.