Decisions on debt management problems looks set to be made quicker, after the government announced proposals to allow bankruptcy declarations online.

If accepted, the suggested changes could mean that decisions on insolvency are made in days rather than weeks.

These proposals were announced to limit the amount of further debt acquired whilst waiting for a decision, after the government found that in some areas of England and Wales there was a three month lag between first contacting the court and a bankruptcy being granted.

Ian Lucas, minister for business, said: “Bankruptcy should be the option of last resort for those burdened with unmanageable levels of debt, and this won’t change under our proposed reforms. However, once a person has decided that it is the only viable solution for their debt problems, these proposed changes will make it easier for them to proceed into bankruptcy.

“Many people delay making a petition for bankruptcy because they do not want to appear in court – meaning they can sink further into debt. We want to reduce that delay, while also freeing up valuable court time and resources to deal with other aspects of insolvency.”

Ministry of Justice figures reported that personal insolvencies are rising sharply, up 18% in the third quarter this year, compared to the same period in 2008. The Council of Mortgage Lenders also revealed that in same quarter the number of homes repossessed in the UK rose to 11,700 – up by 3%.

Ivan Cooper, Chairman at debt advice experts Chiltern, said: “By speeding up the bankruptcy process many people can avoid developing more serious debt problems, as an earlier decision will mean that alternative outcomes could be explored sooner if it is not granted.”

The government proposals only apply to bankruptcy petitions from individuals, and not to petitions brought by creditors, who will still have to make those petitions to the court.