By Julian Knight
BBC News personal finance reporter
Paul Ronney took out an Individual Voluntary Arrangement (IVA)
The latest insolvency figures for England and Wales are published.
They show a rise in the number of people falling into insolvency. BBC News has spoken to someone who found insolvency brought no financial relief.
Like many people who have fallen through the debt trap door, Paul Ronney thought he could handle his borrowings.
"Everything was ok until I broke up with my partner and lost the chance of overtime at work. At that point, I knew I was in trouble and could not make my debt repayments."
Paul Ronney, an engineer from Nuneaton, was in for a nasty shock when he totted up his borrowings. In 2001 he owed a total of £37,000 through loans and credit cards.
"I did not want to go bankrupt as it could end in me losing my house, so I responded to a television advert for a firm which promised to free me from my debt."
What Paul was replying to was a firm which specialises in Individual Voluntary Arrangements (IVAs).
IVAs are an alternative to bankruptcy that allows debtors to come to an agreement with their creditors.
In Britain's debt culture, IVAs are very big business.
According to the Department of Trade and Industry (DTI), 23,000 people declared themselves insolvent in the first quarter of 2006.
About a third of these entered into an IVA arrangement.
During the past few years, a whole industry has sprung up with firms offering to set up and manage customers IVAs for a fee, charged to the creditors.
But for Paul, an IVA turned out not to be the panacea he had hoped for.
"They advertise that you will be free of debt in five years, but the budget they worked out for me was ridiculous. After all my outgoings they left me with just £15 a month to spend.
"What was I to do if I was hit with a sudden one-off expense?
"What is more, they did not take into account the costs of buying my kids Christmas presents. The whole thing was inhuman," he says.
"I knew I had to pay my creditors back but the way it was managed was very bad indeed."
For a short time, Paul was able to do double shifts at work.
However, this income boost had an unforeseen consequence.
"When I told my IVA manager that I had worked double-shifts my monthly repayments trebled overnight.
"I explained that this was only a very temporary income boost but it took four months before they would reduce my repayments to normal," Paul says.
"I found the whole experience very distressing. It all seemed to be about squeezing as much money as they could out of me."
Paul found it hard to keep up his repayments and penalty fees were imposed on his account.
"I asked to reduce my repayments and eventually this was agreed but I did not realise that I would have to pay a series of penalties in the end - to the tune of £100 for each month I underpaid."
Soon after he entered into an IVA, the area of the country in which Paul lives enjoyed a house price boom.
"Eventually, house price growth allowed me to remortgage and offer my creditors a settlement fee, which, thank god, they accepted. This freed me from the IVA"
Paul is now determined to keep his borrowing under control and think long and hard before making any drastic financial leap.
"I have learned a valuable lesson and that is to take time with my finances. I entered the IVA on the back of an advert. It was a very important decision and I should have taken more time over it, to check whether it was really right for me."
In response to Paul's story, R3, which represents insolvency practioners, including the firm Paul dealt with, said its members are subject to strict regulation and all debtors receive "appropriate" advice.