Bankruptcy orders rose 2.4 per cent over 2007 – with 64,480 people going under.

In total there were 106,645 insolvencies last year – new figures from the Insolvency Service (IS) reveal – with 42,165 people filing individual voluntary agreements (IVAs), a fall of 4.9 per cent.

However, the fall in IVAs is not being attributed to Britons getting their finances in order, but banks being less willing to accept the agreements.

In the last quarter of 2007, the effects of banks tightening their lending criteria in the so-called credit crunch did not seem to hit insolvency figures – although a rise in bankruptcies is expected in 2008.

Mike Gerrard, head of personal insolvency at Grant Thornton, said: "Take no heart from this quarter's drop in personal insolvencies, they are merely the tip of the iceberg.

"From here on in it's going to be a rough ride for many individuals and the numbers going insolvent will rise."

The last three months of last year saw 24,846 individual insolvencies in England and Wales - a 3.9 per cent fall from the previous quarter and a 16.4 per cent fall on the end of 2006 - with both bankruptcies and IVA levels decreasing.

However, Grant Thornton has already seen a "marked increase" in debt advice enquiries since Christmas.

Mr Gerrard said: "It's a tough climate out there with forecasts for a rise in inflation and a slowing economy, and that will inevitably flare up the insolvency figures over the next few quarters.

"We've probably seen the last of any decreases in insolvencies for at least the next six months."

The Insolvency Service also revealed a shift toward those in debt trouble filing bankruptcy petitions themselves.

In the fourth quarter of 2007 83 per cent of bankruptcies were made on the petition of the debtor, compared with 53 per cent in 1998.

However, credit rating agency Experian is warning people not to think of bankruptcy as an easy way out of debt.

James Jones, consumer education manager at Experian, said: "We want to make sure consumers are aware of the serious implications of choosing insolvency as a way out of money troubles, particularly as opting for bankruptcy or an IVA will affect your ability to obtain credit and other financial services for years to come.

"Also, because details of bankruptcy orders and IVAs form part of the ‘public’ information on your credit report, the information is often seen by landlords and employers who you allow to make a check, so choosing the insolvency option could affect your chances of renting a home or getting the job you want."

Analysis by Experian shows people in the lowest income groups – with lowest assets and most likely to find borrowing difficult as banks tighten lending – are most likely to face bankruptcy.

However, young families with children in mid-market terraced and semi-detached properties are more likely to choose IVAs.

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