Charity engulfed by people with heavy debts

The number of consumers with spiralling debts jumped by more than 10% over the last year according to Citizens Advice. The charity said its advice bureaux handled 1.4m debt problems in the year to April 2006, an increase of 11% on the previous year.

Many people were close to defaulting on mortgages and secured loans, which the charity said was one of the fastest growing problems.

The report comes a few days after figures showing personal insolvencies rising at an annual rate of 55%, on course to break through the 100,000 barrier.

Recent data also shows that many families are having trouble meeting their monthly mortgage repayments. Lenders started 34,626 repossession actions in the three months to September, the highest figure since the early 1990s.

Liberal Democrat Treasury spokesman Vince Cable has called on the government and major lenders to tackle the problem of rising personal debt. He argued that banks and other finance companies were often lending to vulnerable people, many of them already in debt.

Citizens Advice said that while catalogue and mail order debts remain the largest source of problems, accounting for 824,000 enquiries, housing debt was one of the fastest rising categories.

Of the 127,000 housing debt problems brought to Citizens Advice nearly 10,000 concerned threatened repossession and 2,000 involved actual repossession.

It said: "These figures bear out the findings of an NOP survey for Citizens Advice published in September showing that some 770,000 people had missed at least one mortgage payment in the previous 12 months."

Council tax debt problems handled by the bureaux went up by almost half to 89,000, and debts from unpaid bills on gas, electricity and water were up by 19% to 90,000.

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