Although the recession maybe over, many households are still unable to live within their means.

And experts warned insolvency numbers will rise further once interest rates begin to head above their current low level of just 0.5 per cent.

The latest figures showed 134,142 people in England and Wales were declared insolvent last year, the highest level since records began in 1960 and a sharp increase on the previous record of 107,288 personal insolvencies in 2006.

The individual insolvencies consisted of 17,007 bankruptcies during the last three months of 2009, – which were up 24.9 per cent on the same period a year ago – and 13,219 of its less stringent form, Individual Voluntary Arrangements (IVAs) – which were up 26.3 per cent on the same period in 2008.

An IVA is an arrangement that is entered into with those owed money, while a bankruptcy involves a formal court order where assets are sold to pay off creditors.

An alternative to bankruptcy – a debt relief order – was introduced last April, but various restrictions limit those who can apply, such as not owning your own home and having debts of less than £15,000. There were 5,348 of these orders during the final quarter, up from 4,505 in the previous quarter.