The West Midlands saw 1,023 people declaring themselves bankrupt in the quarter October to December 2005, according to the latest UK bankruptcy petition numbers, released by the Department of Constitutional Affairs.
This brings the total for 2005 to 3,495 - a 36 per cent increase compared with 2004 (2,577).
The West Midlands recorded the fourth highest figure for the year, behind the South-east (6,039), Southwest (5,750) and the Eastern Counties (4,390).
Mark Orton, corporate recovery partner at KPMG in Birmingham, said: "Since Christmas we have seen a dramatic increase in the number of people calling debt help lines which demonstrates the continued build-up of over-indebtedness.
"This should also mean that more people are receiving the quality advice they need and deserve."
Across the UK, people as young as 19 are running up debts that result in an Individual Voluntary Arrangement (IVA) or bankruptcy and, despite changes to the law, graduates are still resorting to bankruptcy to escape from debts - other than student loans, which survive bankruptcy - in record numbers.
Although the statistics do not analyse these cases, it is believed that nearly all are likely to be students bankrupting themselves.
Mr Orton added: "Despite student loans being taken out of the bankruptcy equation, in 2005 nearly 900 former students across the UK were so desperate they decided that bankruptcy was still the best option for them. Clearly, this is not the best start in life for a graduate."
According to KPMG's analysis of IVA data, the average IVA debtor in 2005 owed £60,000 and creditors, including financial institutions, are expecting to recoup on average only 38 per cent of this sum.
The impact of this means that creditors face writing off at least £600 million in bad debts.
Although similar data is not available for voluntary bankruptcies, it is likely that debts owed per case are at similar levels, but the returns to creditors will be minimal.
Mr Orton said: "The IVA is an increasingly popular way forward for many people in financial difficulty as it offers them an opportunity to face up to their problems, draw a line in the sand and restructure their finances.
"Creditors, in the right circumstances, also prefer this as a way forward, as they see a significantly greater return on their money than they would do from bankruptcy.
"Yet we still expect to see a large proportion of the over-indebted decide that bankruptcy is the best option for them."