THERE is increasing evidence that going bankrupt is losing its stigma as consumers struggle with mounting debts.

Three quarters of all people who petitioned for bankruptcy last year did so voluntarily, new figures show. While overall bankruptcy petitions fell slightly last year, figures from the Ministry of Justice showed more people initiating proceedings.

Some 53,114 people petitioned in court to become bankrupt in 2007, up from 52,717 in 2006.

The new figures come just two weeks after Insolvency Service data showed that the number of people declared insolvent fell for the first time in nine years during 2007. While the number of bankruptcies rose, the number of people entering into an individual voluntary arrangement fell sharply.

This fall was partly because of a dispute that broke out between banks and IVA companies.

Banks refused to accept many IVA applications saying that IVA firms were offering payments that were too small and taking generous fees. But this dispute was resolved last month, leaving the door open for more people to use this scheme to write off debts.

Experts said that they expect insolvency figures to climb next year.

Mike Gerrard, head of personal insolvency at Grant Thornton, the accountancy firm, said: "We believe the number of personal insolvencies is likely to increase in 2008 because of problems in the economy and the overhang of personal debt.

"Up until now, the equity in people's homes has been their get out of jail free card, but as the housing market stalls, they will find it harder to get money this way."

The number of companies seeking liquidation also fell last year. The number of winding-up petitions fell to 11,791, down from 12,103 in 2006.

But experts gave warning that these figures could increase next year.

Mr Gerrard warned that debtors were wrong to think bankruptcy was the easy way out after new rules introduced in 2004 allowing bankruptcies to be discharged after one year, rather than the previous three-year period.

He said: "The perception is that it is now easier to go bankrupt because it will be discharged after one year, but this shorter time frame doesn't change the fact that your assets, for example your house, are still up for grabs if you declare yourself bankrupt. Those who go bankrupt will also have to deal with their credit rating being shot to pieces for years to come."

A bankruptcy is included on all credit files for six years.

4:00pm Wednesday 26th March 2008

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