The amount of Londoner's going bankrupt has quadrupled in the last seven years.

Experts warn that the impact from the credit crunch has not been taken into account and that could see bankruptcies increase by another 20 per cent before the year is out.

Borough breakdown

Figures released today represent a rise from an average of 50 people going bust per London borough in 2000 to 201 last year. A borough-by-borough breakdown shows that a total of 6,632 people in London filed for bankruptcy last year, compared with 1,647 in 2000.

Barking and Dagenham, Bromley, Camden, Enfield, Hackney, Greenwich, Haringey, Islington, Lambeth, Lewisham, Southwark, Tower Hamlets and Waltham Forest all saw increases of more than 300 per cent in the seven years.

Those in debt will find refinancing tough to come by as re-mortgaging and consolidation loans dry up.

IVA's

The rise in Individual Voluntary Arrangements is another symptom of the trouble Londoner’s find them in.  IVAs allow people to avoid bankruptcy by rearranging how they repay their debt.

Banks and other financial firms now appear to be raising the hurdles for customers to be able to take out an IVA after criticising assertions by some IVA providers that customers can avoid 80% of their debts.

Groups like moneysavingexpert.com have warned people about what they call a "cut down form of bankruptcy." Saying:

"What they’re trying to flog you is a cut down version of bankruptcy...These are often hard sold, as they can make the arranger £5,000 plus. Sadly some who just have mild debts which they can repay are misled. For others in debt-crisis, they may be a good solution, yet even then be careful."

Consumers owe more than £1, 000bn on cards, mortgages and loans. About 80% of UK personal debt is in the form of loans secured against homes, such as mortgages and re-mortgages.