The number of people who slipped into personal insolvency in 2014 was at its lowest level in nine years, official figures show.

Some 99,196 individual insolvencies were recorded last year, marking the first time that the annual total has dipped below 100,000 since 2005, according to the data released by the Insolvency Service.

The latest annual total, which is made up of bankruptcies, debt relief orders and individual voluntary arrangements (IVAs), also represents a 1.8% fall on the number of personal insolvencies recorded in 2013.

Bankruptcies were at their lowest annual level since 1998 last year, while, by contrast, the number of IVAs taken out was the highest since their introduction in 1987.

There were a total of 20,318 bankruptcy orders in 2014, marking a 17% fall on the number in 2013. Bankruptcies tend to be seen as a "last resort" and their decline has been hastened by the introduction of DROs in 2009.

DROs are often dubbed "bankruptcy light" as they are aimed at people with lower amounts of debt but no realistic prospect of paying it off.

There were 26,688 DROs recorded in 2014, which is a 3% year-on-year decrease and the lowest annual total seen since 2010.

Meanwhile, 52,190 IVAs were taken out last year, meaning they made up more than half (53%) of all personal insolvencies last year, compared with less than one third (30%) in 2005.

IVAs involve an agreement whereby the person who owes money repays creditors some or all of what they are owed. The number of IVAs taken out last year increased by 7% compared with 2013, marking the second year-on-year increase in a row.

Mark Sands, personal insolvency partner at Baker Tilly, said: "At a time when annual personal insolvency levels are at a nine-year low, the demand for individual voluntary arrangements across 2014 hit an all-time high.

"This is a sign that people are feeling confident enough about their financial prospects to commit to a five-year repayment plan rather than opting to walk away from their debts by entering into a debt relief order or bankruptcy."

The figures, which cover England and Wales, show that in the final quarter of last year, there were 22,433 personal insolvencies, which is the lowest quarterly total since winter 2005.

Louise Brittain, council member of insolvency trade body R3, said: "The last quarter of the year tends to be quieter for new insolvencies.

"With Christmas festivities approaching, many people with debt problems put off making decisions or taking action until the New Year."

Low interest rates have been seen as a major factor in helping many people to keep their debt levels manageable.

But some experts have raised concerns that with interest rates and inflation at low levels, some people could over-stretch their finances and face a shock when interest rates eventually start to increase, pushing up the cost of borrowing.

Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: "While it is really welcome to see insolvencies reach their lowest level in nearly a decade, on the debt advice front line we know that more and more people are falling into difficulty with smaller debts from everyday household bills.

"Interest rate rise predictions may be receding into the future, but the more borrowing people take on now, the more vulnerable they will be to higher interest rates when they do arrive.

"It is crucial that consumers do not rush into taking out credit without thinking hard about the underlying fundamentals of their personal finances - and that anyone struggling to cope seeks free advice as early as possible."

Bankruptcy numbers are generally expected to edge down further in the coming months, as new rules should make it easier for people to take out a DRO as an alternative, as well as making it less likely that people will be forced to go bankrupt.

Earlier this month, the Government announced plans to increase the minimum level of debt for which someone owed money can force a person into bankruptcy from £750 to £5,000, marking the first time the limits have been revised since 1986.

At the same time, it plans to raise the maximum amount of debt that people can hold if they want to take out a DRO from £15,000 to £20,000. It is estimated that this move will allow around 3,600 more people a year with problem debt to enter a DRO.

The changes are set to come into force in October, subject to parliamentary scrutiny.