The number of people declared insolvent in England and Wales reached a new all-time high of 135,089 in 2010.
The Insolvency Service said the 0.7% rise on 2009’s figure came despite a 13.6% drop year-on-year in individual insolvencies during the final three months of the period as the number of people struggling financially continued to decline.
The figures showed that 30,729 people were declared insolvent in the fourth quarter, which was also down on the previous month by 9.4%.
That drop came as the number of personal bankruptcies fell to its lowest level for more than five years, at 12,049 in the three months to December 31.
This was down 29.2% on a year earlier and was the lowest since the first quarter of 2005.
Personal insolvencies have now fallen consistently quarter-on-quarter since the beginning of 2010.
The figures also show further improvements in company liquidations across England and Wales, which fell 15.9% in 2010 to 16,045.
But in a worrying sign for UK businesses, company administrations – often seen as a more representative measure – rose quarter-on-quarter for the first time since the height of the financial crisis.
There was also caution over the outlook for personal insolvencies, despite the recent improving trend.
Debt charity the Consumer Credit Counselling Service (CCCS) warned that the squeeze on household income this year from tax hikes, spending cuts and soaring inflation was likely to push personal insolvencies higher in 2011.