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Sydney's lower income suburbs are home to some of fastest increases in bankruptcy rates as higher interest rates and a slowing state economy take their toll.

South West Sydney saw bankruptcies rise 27 per cent in the year ended June 30, 2006, compared with the previous year, according to data compiled from the Insolvency and Trustee Service of Australia.

West Sydney saw bankruptcies rise 19 per cent during the same period.

Meanwhile bankruptcies in the more affluent North Sydney rose four per cent.

The figures underline how lower income families saddled with record levels of debt are struggling to meet repayments even as unemployment hovers at 30-year lows, said Paul Leroy, who heads the personal insolvency division at Hall Chadwick.

"It is clear that ordinary working people and battlers are doing it the hardest," Mr Leroy said.