Declaring bankruptcy can have long lasting effects on a consumer's credit record, contrary to the common belief that it will be wiped clear for the future, warns a credit reference agency.

Levels of personal insolvency have seen a sharp rise in the past few months with figures from Experian showing over 23,000 people declared bankruptcy in the first quarter of 2006 – an increase of 73 per cent on the same period last year.

The credit expert has launched a new guide called 'Your Credit Report and Bankruptcy' to explain what it means, what effect it can have and how to seek alternatives to bankruptcy and where to go for help if you are in financial difficulty.

"For some people there might be a better or at least a more suitable solution like Debt Management Plan. We want to make sure that people understand the consequences of bankruptcy, "said James Jones, consumer affairs manager at Experian.

The agency is concerned that in general, people wrongly assume that their credit record is wiped clean after being discharged.

"If you are to blame for your bankruptcy, you could have a bankruptcy restriction order. This will appear on your credit report for up to 15 years. It is a tough restriction but it is made to stop people abusing the system," Mr Jones added.