In the first three months of 2009, there were 29,774 individual insolvencies in England and Wales - 19,062 bankruptcies and 10,713 IVAs (Individual Voluntary Arrangements) - according to the Insolvency Service website.

According to KPMG, the record bankruptcies in the first three months of the year are 'a sign of things to come'. KPMG predict a record 150,000 personal insolvencies in the year as a whole - and they're not the only ones expecting the number of insolvencies to keep climbing.

First of all, the recession is likely to lead more and more people into serious financial problems to which there's no realistic solution apart from insolvency.

According to the Office for National Statistics, all the recent unemployment figures are bad news. The actual number of unemployed people has increased (to 2.22 million), and so has the unemployment rate (to 7.1%) and the claimant count (to 1.51 million).

At the same time, the number of vacancies has fallen (down to 455,000), which clearly makes it harder for people who've lost their jobs to find a new source of income.

Second, April 6th 2009 saw the introduction of the Debt Relief Order (DRO) - a new form of insolvency. Unlike bankruptcy, entering a DRO costs just 90, so it might be affordable for many people who had been considering insolvency but were unable to afford the fee of around 500 which bankruptcy would require.

But that cost is by no means the only difference between a bankruptcy and a DRO. DROs are specifically designed to help people with limited assets (worth 300 or less), minimal disposable monthly income (50 or less) and low debts (under 15,000). People who don't meet those strict criteria simply won't be eligible for a DRO - but if they genuinely don't think they'll be able to repay what they owe within a reasonable period of time, they may wish to find out more about IVAs and bankruptcies.

The question "Would I better with an IVA or bankruptcy?" isn't an easy one to answer, as it depends on the individual's circumstances.

IVAs normally last five years; bankruptcy tends to last just one (although the payments can last for three years and if a Bankruptcy Restriction Order is granted (which would only happen in an exceptional case), this can last for 15 years).

Bankruptcy is very likely to force the sale of the individual's home, while an IVA is very unlikely to do so - although it will probably require them to release some of the equity in their property so they can give their creditors more.

These are just two of the differences between an IVA and bankruptcy. There's no way to be sure without talking to a professional debt adviser, but in general, it's fair to say that someone with high debts and few assets might be better off looking into bankruptcy - if they're unemployed or living on a low income, and if they don't think their financial situation will improve in the foreseeable future.

An IVA, on the other hand, is more likely to be appropriate for someone who owns a home, who can commit to making regular contributions to the IVA, who doesn't want to see their insolvency publicised and / or who is worried that being declared bankrupt would keep them from pursuing their career (as a company director, for example, or a local government councillor).