'I'm worried and I can't sleep,' says Steve Marks. 'The stress really isn't helping my health.'

Steve [not his real name] is one of more than 500 people who last Monday rang the National Debtline, the free and confidential helpline for anyone with a debt problem. His level of debt is typical of callers: he is £500 in arrears on his mortgage, more than £1,000 behind in council tax payments and owes £23,000 on three credit cards. It is all getting too much for the 38-year-old father of three from Leicestershire.

It wasn't the first time Steve had rung. This time he had been concerned about a visit by a debt collector pursuing an unsecured bank loan from HSBC. 'I'm being harassed,' Steve complains. 'They've been ringing me at work and then a complete stranger turns up at my house and won't even give me his name.'

Naomi Harflett, one of 48 advisers on duty at the Birmingham-based call centre, advises him that debt collectors have to comply with the Administration of Justice Act, which expressly bans threatening behaviour.

She takes the opportunity to remind Steve that the loan he is being pursued for isn't necessarily the debt he needs to attend to most urgently. 'You must sort your priority debts - mortgage arrears, gas and electricity and your council tax - from non-priority debts,' she says. 'You must make sure that you keep paying the priority debts.'

Steve is stretched though. He has agreed to pay £70 on top of his monthly mortgage repayments to clear his arrears, £100 a month in another deal with the bailiffs over his council tax and £20 a month to each of his creditors. Harflett is anxious that Steve has over-committed himself. 'Do you know if what you've offered is affordable?' she asked. No, Steve didn't.

The National Debtline is on the front line of the credit crunch. Paul Mullins, the charity's chief executive, reckons its advisers will take 200,000 calls this year. 'We have just come to the end of the third quarter for 2008 and demand is 30 per cent higher than last year,' says Mullins. 'In the second quarter it was about 15 per cent higher. We're about to enter a period where demand is going to rise very rapidly.'

The helpline, which gets one third of its funding from government and the rest from the finance industry, doesn't advertise its services but is listed in telephone directories. In the three-month period to August, 16 per cent of callers were in arrears on their mortgage, compared with 12 per cent last year. 'We're seeing similar rises in fuel debts,' says Mullins. 'If you don't pay your gas or electricity bills, you could find yourself without heating with winter coming.'

The National Debtline offers what advisers call 'assisted self-help'. 'We give the best technical advice we can and we're there to lend a sympathetic ear,' says Mullins. Advice is free, impartial and not time-limited. Case notes are taken by trained staff and callers can ring back. More often than not they do, some as many as 20 times.

'Debt problems are an area where, if you present people with information, the majority can deal with it themselves,' says Mullins. That appears to be borne out by a new survey of clients who have contacted the helpline since 2003. Nine out of 10 who have made new payment arrangements with their lenders have been able to stick to them.

Back on the phone lines, the calls are non-stop. 'Aside from the priority debts, do you have any money owing by way of credit cards, loans or overdrafts?' asks adviser Pamela McGrath. 'All of the above,' replies Trevor, a 38-year-old from the Midlands who is married with two children. He has called the helpline for an information pack but McGrath, mindful of the charity's responsibility to ensure that callers' priority expenses are met, quizzes him about money problems: 'How much do you owe and to how many creditors?'

'About £25,000 on six cards,' Trevor replies.

Are you struggling to meet your monthly mortgage payments?

'Yes, we are,' replies his wife (the call has been switched to speakerphone).

Any equity left in the property?

'Not a lot,' he says, 'about £25,000.'

McGrath advises the couple to complete the National Debtline budget sheet, which enables them to calculate available income after they have paid their mortgage, council tax, gas and electricity. If there is any money left over for the creditors, they need to work out what they can afford to pay and contact creditors making 'pro rata' offers.

Alternatively, the couple could enter into a free debt-management plan, whereby the charity will act as middleman as long as they owe at least £5,000, have at least three creditors and £100 a month of available income. Then there are the less attractive options of bankruptcy or individual voluntary arrangements. But first McGrath suggests that Trevor and his wife consider terminating a hire purchase agreement on a £13,000 car. 'You could sell that tomorrow, buy a smaller vehicle for £3,000 and have £10,000 as a lump sum which you could offer towards your creditors as full and final settlement,' she says. The option is not enthusiastically received by Trevor, who clearly wants to keep his motor.

McGrath and Harflett both reckon that the average level of debt for those ringing in with mortgage arrears is between £20,000 and £30,000. But, adds Harflett: 'Last week I spoke to an independent financial adviser who owed £255,000 on credit cards with his wife.'

'The larger institutions are becoming better listeners,' reckons Mullins. 'It's good business sense. If they come down heavily, they're going to lose clients they spent a lot of money acquiring.'

Some lenders do 'come down heavy' though. 'I have a problem,' begins Harflett's next caller. Paul and his wife aren't in mortgage arrears, but they face being made bankrupt, losing their home, as well as some, possibly all, of the £70,000 equity in that house. Their problem is a five year old credit card bill of £3,538. A debt collector has issued a bankruptcy petition and a hearing is due next week.

'You need to act quickly or you could lose your home,' Harflett advises. Bankruptcy would mean their property would have to be sold, with the equity used to pay off administration costs as well as credit cards. 'That's really aggressive behaviour,' says Harflett, 'but we're seeing more of it.'



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