The UK consumer debt problem is rocketing out of control. Total consumer debt has passed the £1 trillion mark and now stands at £1.13 trillion. Whilst average household debt across the UK is of £4,092 and is set to rise.

Meanwhile the number of bankruptcies being declared is increasing year on year. In 2005, the total number of bankruptcies recorded was 70,000. This figure was much higher than bankruptcy figures for 1992 when the UK was in recession. The reason for the rise in debt and bankruptcies is two-fold.

First the stigma associated with being in debt and going bankrupt is eroding. More and more people are seeing debt as an inevitable aspect of modern life. Moreover, they are seeing bankruptcy as a route out of their troubles rather than something that should be avoided.

The other key factor contributing to the increasing levels of debt and bankruptcy is the easy availability of credit. Lenders compete aggressively in the UK encouraging consumers to borrow now and worry about the future later. Then they sting them with huge interest rates.

Of course the Labour government has not done much to cap lending or discourage bankruptcy despite all the lip service it pays to doing so. For instance, the rule changes to the Enterprise Act of 2002 allowed debtors to be discharged from their debts within one rather than three years.

Yet despite the seemingly relaxed consumer attitude to debt and bankruptcy, they really should be avoided if possible. Being in debt is extremely upsetting and stressful. This is shown by the fact that 70% of couples breaking up state financial worries as the main reason.

Furthermore, bankruptcy carries long term disadvantages and penalties. Bankrupts often lose their homes and find it impossible to obtain credit at normal market rates, for example.

So is there an alternative to bankruptcy and debt?

One of the best ways to stay out of debt is to manage your money carefully and not spend more than you can afford. Rather than borrowing money to purchase goods, it is much better to save up and wait until you can afford to buy them on your own.

There is also a very good alternative to bankruptcy. This is the IVA and it was introduced via the Insolvency Act of 1986.

An IVA allows debtors to clear their debts by making affordable monthly repayments over a five year period. During this time interest on the debt is frozen and often a certain amount of the debt is written off altogether.