The true scale of personal debt is hidden, with up to 600,000 people being missed off official insolvency figures, according to an East Anglian expert.

Chris Williams, eastern region council member for R3 and a partner at McTear Williams & Wood, said the 600,000 had not been included in national figures because they were repaying debts under a debt management plan (DMP).

His findings are based on the results of a YouGov debt tracker survey, carried out last month in consultation with R3, the trade body for insolvency professionals.

Mr Williams said: "A DMP is an informal alternative to an individual voluntary arrangement (IVA) or bankruptcy and works to clear an individual's personal debt without the formal implications of an official arrangement.

"It does not form part of the government's insolvency statistics, which means that the true proliferation of debt in this country is going unrecognised.

"Indeed, according to our research, the 600,000 debtors using DMPs is four times the number who said they were in an IVA and double the number who said they currently are, or have ever been, declared bankrupt."

R3, which has long called for the plans to be included in these figures, warned that debt management plans were being used as an "out of sight parking lot for debtors".

The Insolvency Service's figures show that 24,553 people went bankrupt or took out an IVA during the three months to the end of June, although these figures do not reflect the number of people who were already on IVAs or were previously declared bankrupt. Nick O'Reilly, president of R3, said: "A DMP can

be a good option for individuals

who have manageable levels of

debt, which can be paid off

without entering into a formal arrangement.

"The benefit of the DMP is that it does not have as severe an effect on the person's credit rating. However, there is cause for concern that these informal arrangements have the potential to turn into a life sentence."

Unlike an IVA or bankruptcy, a DMP does not have a set duration. Research carried out for R3 found that 19pc of people currently in one of the plans thought it would last for more than 10 years, while 29pc did not know how long it would last.

The research also found evidence that people's finances were becoming increasingly stretched.

One in five people now find keeping up with bills a constant struggle or have already fallen behind with them.

Around 63pc of households also said their financial circumstances had got worse during the past six months, with just 13pc seeing an improvement.

Four out of 10 people currently use their overdraft, while 34pc have outstanding credit card debt and 30pc have no debt.

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