The number of people declared insolvent in England and Wales has fallen to its lowest level for more than two years during the first quarter.
A total of 30,162 people were declared bankrupt or took out an individual voluntary arrangement (IVA) or debt relief order during the three months, the lowest level since the final quarter of 2008 and the fourth consecutive quarterly fall, the Insolvency Service said.
But in a worrying sign for UK businesses, company liquidations increased by nearly 4% to 4,121, on a seasonally-adjusted basis, while company administrations, often seen as a more representative measure, rose for the second consecutive quarter to 782.
The fall in the number of individuals unable to keep up with their debts had been widely expected, as the problems caused by the credit crunch have limited the amount of money people can borrow.
But commentators warned that they expected figures to begin rising again during the second half of the year, as the combination of Government spending cuts, high unemployment and the squeeze on household incomes took their toll.
An increase in interest rates, which is now expected to happen later this year or in early 2012, is also expected to push many households, who are currently only just managing to cope with their debts, over the edge.
The figures also showed that while the total number of people declared insolvent had fallen by 15.5% year-on-year, those going bankrupt increased by 4% compared with the previous quarter to 12,539, although this was still nearly a third lower than during the same period of 2010.
Bev Budsworth, managing director of debt management company The Debt Advisor, said: "Levels of personal insolvencies have been reducing throughout 2010, but I believe that we may be on the verge of seeing levels rise again to around 130,000 by the end of this year - quadrupling the levels we saw a decade ago - as the Government's austerity measures start to bite."
She added that with Britons collectively owing more than £1.453 trillion, debt problems were an issue that was not going to go away.
Louise Brittain, personal insolvency spokeswoman for Deloitte, said: "The economy as a whole still remains fragile with households feeling the squeeze from high inflation, tax rises and the prospect of job losses, we cannot count on this positive trend continuing as the year goes on."