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More individuals than ever before were declared themselves insolvent last year, with the last three months also hitting a new record.

The Insolvency Service said 134,142 people in England and Wales were declared insolvent last year, a 26% increase on 2008.

More than half of these were bankruptcies, with the rest individual voluntary arrangements (IVAs) and Debt Relief Orders.

The number of personal insolvencies rose 25% in the last three months to 35,574, with IVAs and the new form of bankruptcy, Debt Relief Orders, driving the rise, though there was a slowdown quarter on quarter.

The growth rate of individual insolvencies reduced to 0.9% quarter-on-quarter in the fourth quarter of 2009, to follow a 6.6% quarter-on-quarter rise in the third quarter and 9.3% quarter-on-quarter rise in the second quarter.

Company liquidations fell 1.7% in the last three months of 2009 to 4,566 and by 1% over the same time 12 months earlier, but over 2009 as a whole the number of firms liquidated rose by 23% to 19,077.

"Despite the economy staggering out of recession in the fourth quarter of 2009, economic activity is unlikely to be strong enough for some time to come to stop many more companies from going out of business although hopefully the number failing will moderate further," said Howard Archer, chief UK economist at IHS Gloal Insight.