The Department of Trade and Industry said 35,898 people went bankrupt in 2004, up 28 per cent on the previous year. In the last three months of 2004, personal insolvencies rose nearly 35 per cent to 13,013 against the same period a year ago.
Three-quarters of those going bankrupt between October and December were forced into insolvency by their creditors, with the remainder choosing to liquidate their debts.
But in 2004, 75 per cent of all bankruptcies were self-declared - the highest proportion ever and more than double the rate of four years ago.
Steve Treharne, the head of personal insolvency at KPMG, said recent changes to bankruptcy laws, which make it easier to declare bankruptcy, were making it a more attractive option for debtors.
"The early discharge from bankruptcy, potentially after only a few months, allows a debtor to quickly restart their financial life and reduces the stigma attached to bankruptcy," he said. "This meets the Government's aim of rehabilitating debtors and encouraging them once more to contribute to the economy."
But Charles Turner, of PricewaterhouseCoopers said: "Many consumers have been on a spending binge. Despite consumer spending showing signs off tailing off over the Christmas period, there is still a huge amount of personal debt in the system, and personal insolvencies could well reach 50,000 new cases in 2005."
Personal bankruptcy figures contrasted sharply, however, with company failures. The number of companies going into insolvency dropped in the last three months of 2004, the figures showed.
There were 2,938 liquidations in England and Wales in the fourth quarter, down by 0.9 per cent on the previous quarter and by 11.1 per cent on the same period a year ago. A little less than half were compulsory liquidations, as the number of voluntary liquidations fell 17 per cent to 1,802.
Figures from the Insolvency Service also showed that receiverships had fallen 24 per cent on the same period last year while administrations had risen 84 per cent.Reuse content