There is likely to be a steady growth in the number of insolvencies in 2008, with more people entering individual voluntary arrangements (IVAs) and more declarations of bankruptcy.

That is the assessment of Debt Help UK, who said the historical growth in IVAs would be boosted by high numbers of people coming to the end of their fixed-term mortgage agreements.

And the fallout from the subprime mortgage crisis in the US is only set to exacerbate personal debt problems.

Iain Wrenshall, director of Debt Help UK, said: "Due to the much talked about credit crunch, a lot of specialist mortgage products previously offered to people under financial stress have been removed from the market place, which would otherwise have allowed them to restructure their finances by consolidating their unsecured debts using the equity in their property."

Some 23 per cent said they were finding their current level of debt unmanageable in a recent survey by uSwitch.

UK consumers are collectively paying £93 billion in interest on loans, credit cards, overdrafts and mortgages with personal debt totalling £1.39 trillion.


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