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The company has calculated that about 110,000 people became insolvent this year, with 45,000 opting for an IVA.
KPMG also found that adults (some as young as 21) were running up massive debts which were way beyond their ability to pay. On the whole, the average debtor owes £52,000 but most feel they can only afford to pay back 39 per cent of the total amount.
Steve Treharne, head of personal insolvency at KPMG, said: "Most of the money is borrowed to meet current expenditure (including lifestyle items such as holidays) rather than to acquire assets or to fund a business.
"Given so many people with enormous debts and the high average level, too many people have debts that they have no realistic hope of repaying."
According to the government, there were 12,228 IVAs and 15,416 bankruptcies in the third quarter of 2006.
