But while bankruptcies dropped from 11,056 in 2011-12 to 8,838 in 2012-13, there was a rise of almost 40% in the number of people using an approved debt payment programme (DPP) to repay what they owe.
There were 4,632 DPPs approved last year, 39.6% more than in 2011-12 and more than 10 times the total from five years ago, with just 442 of the payment programmes approved in 2007-08.
Debts covered by DPPs amounted to just over £196 million last year, up from just under £144 million in 2011-12.
The figures were revealed in the Accountant in Bankruptcy's annual report, which also showed a 25.3% drop in the number of companies going into receivership and liquidation.
There were a total of 1,022 liquidations and receiverships recorded in 2012-13, a fall from the previous year's total of 1,369.
Accountant in Bankruptcy chief executive Rosemary Winter-Scott said there had been a reduction in bankruptcies "despite the current financial climate".
She added: "There has however been a marked increase in the number of approved debt payment programmes (DPPs) under the Debt Arrangement Scheme (DAS) which shows that more people are using DAS as an alternative to personal insolvency."
Ms Winter Scott said: "The annual report for 2012-13, reflects another busy and exciting year across the whole organisation, with much progress made towards our vision to create an insolvency system that is part of a financial health service through our considerable work on policy and legislative reform.
"Going forward, work will continue on achieving efficiencies and delivering the best possible services to the people of Scotland, which I realise would not be possible without the hard work and dedication of my staff, board and stakeholders. "