There are several different forms of insolvency
The number of people who were declared insolvent in England and Wales hit a record high in the last quarter of 2009 and during the year in full.
The figures from the Insolvency Service marked the depth of the recession, with 35,574 people declared insolvent in the last three months of the year.
That was a rise of 25% on the same period a year earlier.
The number of businesses going bust also rose to a new annual record in 2009, with 6,355 going under.
Over 2009 as a whole, there were 134,142 people declared insolvent in England and Wales. This was up 26% compared with 2008, and higher than the previous record - in 2006 - of 107,288. Records began in 1960.
FORMS OF INSOLVENCY
Bankruptcy: The traditional way of escaping overwhelming debt. Ends after one year, but you are likely to lose all your assets including your house to pay something to the creditors
Individual voluntary arrangement (IVA): A deal between you and your creditors, overseen by an insolvency practitioner. Less stigma, less chance of losing your home, but involves paying some of your debts in one go or over a number of years
Debt Relief Orders: Introduced in April 2009, these allow consumers with debts of less than £15,000 and minimal assets or surplus income to write off debts without a full-blown bankruptcy
However, the number of personal insolvencies only crept up by 332 in the final three months of the year, compared with the previous three months.
The quarterly total was made up of 17,007 bankruptcies - down 5.5% on the same quarter of the previous year, 13,219 Individual Voluntary Arrangements (IVAs) - up 26.3% on the corresponding quarter of the previous year, and 5,348 Debt Relief Orders (DROs) - which were introduced in April.
These DROs allow people with debts of less than £15,000 and relatively few assets to write off these debts without a full-blown bankruptcy.
Record low interest rates would have staved off insolvencies for some people, but long-term unemployment would make it difficult for others to avoid the situation.
Creditors have also started to get tough, according to Louise Brittain of Deloitte. This was reflected in the jump in IVAs, when individuals come to an official deal with their creditors.
"This is a result of increased creditor pressure which is unlikely to let up any time soon, and highlights the desperate financial difficulties facing individuals," she said.
She added that the rise at the end of 2009 was surprising given that many people tended to delay dealing with acute debt issues until after Christmas.
IVAs could also have risen as people cutting hours instead of being made redundant had some funds to pay back debts instead of going bankrupt.
Many experts have suggested that there will be more pain to come despite the UK coming out of recession.
"We expect to see the numbers continue to rise as the upwards trend in personal insolvencies traditionally continues for nearly three years after the worst of a recession has passed," said Pat Boyden, from accountancy firm PricewaterhouseCoopers.
In the last quarter of 2009, the number of companies going bust fell by 7% to 1,465, compared with the previous quarter.
The figures continued the downward trend in receiverships, administrations and company voluntary arrangements which has been seen during the past year.
Even so, 2009 as a whole still saw a record number of companies being declared insolvent with an annual total of 6,355, a 1% increase on 2008.
The number of companies being liquidated - the end stage of the insolvency process - fell in the last three months of 2009. There were 4,566 company liquidations, down by 2% on the previous quarter and 1% fewer than a year earlier.
For the whole of 2009, the number of firms being liquidated rose to a record 19,077, an increase of 23% compared with the previous year.
HM Revenue and Customs has held back on winding up businesses owing to unpaid tax bills, according to insolvency practitioner Alan Tomlinson.
"The Revenue are being quite benevolent at present with Britain's struggling businesses but it is likely they will roll up their sleeves once the general election is behind us. Therefore we are likely to see another wave of company failures in the second half of the year," he said.
Compared with the last recession in the early 1990s, the latest figures show a very different picture.
The number of individual insolvencies has shot up in the past decade, and now far outstrip the numbers seen in 1992 and 1993 of about 37,000 each year, although it is easier now to be declared bankrupt.
Experts said this was because the amount of credit built up by individuals - especially on plastic - mushroomed in the last decade. Since 1993, the amount of personal debt in the UK - including mortgages - has risen from £398bn to £1.46 trillion.
IVAs were also in their infancy in 1992-3.
This means that 0.3% of the adult population was declared insolvent in 2009, a far higher rate than the 0.1% recorded in 1992 and 1993.
But the number of companies being wound up, via various forms of liquidation, still falls far short of those recorded in 1992.
Then, 24,000 companies were wound up, 2.6% of all companies in existence.
The current liquidation rate, which has increased in the past two years, is still less than 1%.