The number of people taking out a type of personal insolvency where money is shared out between creditors has surged to its highest level since records started in 1987, according to official figures.

A 20% year-on-year upswing in the number of people using individual voluntary arrangements (IVAs) has pushed the number of personal insolvencies in England and Wales in the second quarter of this year to its highest level since autumn 2012, according to the Insolvency Service.

Some 14,571 IVAs were taken out between April and June, which the Insolvency Service said is the highest level recorded since their introduction 27 years ago. IVAs now make up over half of all individual insolvencies.

An IVA is a plan, often lasting for around five years, that someone agrees to in order to pay off their debts to creditors. They are one of three types of official personal insolvency, alongside bankruptcies and debt relief orders (DROs).

Overall, some 27,029 people slipped into personal insolvency in the second quarter of this year, marking a sharp 8% jump on the previous quarter and a 5% increase on the same period last year.

Within the latest quarterly total, both bankruptcies, which are often seen as a "last resort", and DROs have edged downwards year-on-year.

Experts said the jump in the number of IVAs could be taken as a sign of the improving economy, as creditors see their prospects of realistically being able to claw back money increase and consumers become more confident about being able to commit to such a plan to clear their debt.

Matthew Chadwick, business restructuring partner at BDO, said: "Now property prices are rising, creditors are more likely to think about recouping long-standing debts. A continuing rise in the number of personal insolvencies in the next 12-18 months is therefore likely...

"With the economy looking more healthy, those with bad debts are now more likely to be asked to pay them back."

Mr Chadwick continued: "Today's rise in individual voluntary arrangements is typical at our position in the economic cycle and need not be cause for alarm.

"There are many signs of a strengthening recovery including rising wages, record employment figures and increased retail spend: this, paradoxically, is another one of them."

Low interest rates have been credited with helping to keep insolvency levels generally subdued during the tough economic climate.

Mark Sands, personal insolvency partner at Baker Tilly, said of the large upswing in IVA numbers: " This is a sign that people are confident enough in their financial prospects to commit to a five-year regular payment plan to settle up their debts in full with the balance then written off, and reflects the ongoing positive effect of record low interest rates.

"It is to be hoped that many of those people entering IVAs now will be able to see them through to their successful conclusion, but the prospect of interest rate rises, even if gradual and limited as promised, will have a significant impact on those whose budgets are already tight."

Phillip Sykes, vice-president of insolvency trade body R3, said IVAs have become "much easier to access recently".

He said: "Our members have seen IVAs set up for as low-value debts as a few thousand pounds and with surplus incomes (monthly incomes set aside to make IVA contributions after payment of living expenses) well under £200.

"These IVAs wouldn't have been considered a few years ago and people might have used debt management plans or informal arrangements instead."

The Insolvency Service said 5,452 bankruptcy orders were recorded in the second quarter of this year, marking a fall of almost 16% on the same quarter one year ago.

Bankruptcies have generally been on a downward path in recent years, but the Insolvency Service said the rate of decrease has slowed recently.

Some 7,006 DROs were recorded in the second quarter of this year, marking a fall of nearly 2% on the same period a year ago. This type of insolvency was introduced in 2009 and is aimed at people with relatively low amounts of debt but no realistic prospect of paying it off.

Mr Sykes continued: "The first half of the year can be a busy time for insolvencies thanks to a combination of people putting off dealing with problems until after Christmas and the post-Christmas bills landing on the doormat in January, February or March."

The figures also show that the number of companies going into administration reached a nine-year low in the second quarter of the year.

Some 410 administrations were recorded across England and Wales in April to June, marking the lowest quarterly figure seen since early 2005 and a 35% decrease compared with the same period in 2013.

Meanwhile, there were 2,487 voluntary company liquidations during the second quarter, representing an 18% decline on the same period a year ago and the lowest quarterly figure seen since 2008.

The number of companies subject to a compulsory winding-up order also edged down, remaining in line with a "fairly stable" trend seen since mid-2012, the Insolvency Service said.

Mr Sykes said of the corporate insolvency figures: " Some sectors, like the legal sector, have encountered regulatory challenges, which has led to higher insolvency numbers there, but for everyone else the past few years have been the same story: low interest rates and lenient lenders.

"An interest rise could cause some businesses extra problems, but it would have to be more than a couple of quarters of a percentage point to make any real difference."