Expert: Bankruptcy should be `last resort`

Bankruptcy action should only be taken as a last resort, a major credit organisation has warned.

IVAs and debt management plans are seen as good alternatives for those in financial difficulties, as bankruptcy has a "real stigma" still attached to it, according to Credit Action.

Bankruptcy penalties stay on the consumer`s record for six years, potentially resulting in difficulties trying to get credit in the future.

However, bankruptcy can be the "right thing to do" to "start with a clean slate" in some situations, according to Credit Action deputy director Chris Tapp.

Mr Tapp added: "There is still a real fear for people in going bankrupt and people do still make an instantaneous judgment on somebody if they know they`ve gone bankrupt."

According to Credit Action statistics released earlier this month, total UK personal debt was £1,345 billion at the end of June, an increase of 10.2 per cent on the previous 12 months.