A record number of people were made insolvent in the three months to the end of September, fuelled by a rise in the number of debt relief orders, a cheaper form of bankruptcy for people on low incomes introduced earlier this year.

In contrast, the number of businesses declared bankrupt fell, down 4.7 per cent on the previous quarter, although it was still 14.6 per cent higher than the same period a year ago.

There were 35,242 personal insolvencies in England and Wales for the three-month period to the end of September, according to figures released today by the Insolvency Service, a Government body.

This was a 28 per cent increase on the same period last year, and a 6 per cent rise on last month’s record of 33,073. It was also the highest level since records began in 1960.

Britain is still languishing in recession and yesterday the Bank of England increased its scheme to print money to pump into the economy in order to kick-start lending by £25 billion to £200 billion.

The number of debt relief orders, which were introduced in April, rose from 2,000 in the previous quarter to 4,505. These allow those with debts of less than £15,000 and assets of less than £300 to declare themselves bankrupt for a fee of £90, rather than the usual £510.

There were 18,347 bankruptcies declared, up 6.4 per cent on the same quarter last year and 12,390 Individual Voluntary Arrangements (IVAs), a relatively expensive form of repayment plan, up 20.9 per cent on last year.

Eight-five per cent of bankruptcies were made at the request of the individual, slightly down on the previous quarter.

In Scotland and Northern Ireland, personal insolvencies fell by just 4.2 per cent on the same period last year, to 6,020.

In business, 4,716 companies were declared insolvent in England and Wales in the three months up to September 30.

This was made up of 1,301 compulsory liquidations, down 12.9 per cent on the same period last year, and 3,415 creditors voluntary liquidations, up 30.2 per cent on last year.

In the 12 months ending September 30, approximately 1 in 114 active companies went into liquidation, which is up slightly on the previous quarter when the figure was approximately 1 in 120.

Begbies Traynor, the restructuring advisory firm, said last month that there was growing evidence that Britain was only at the mid-point of a "W" shaped recession, and that it expects 40,000 businesses to go bust next year.

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