£1.5 trillion! Britons rack up a record personal debt mountain - Feb 2010

Britons are struggling with an astronomical collective personal debt of £1.46 trillion.

Advice agencies are under siege, with an increase of 30 per cent in the number of people seeking help in one year.

Some are being forced to wait up to six weeks for an appointment.

Others are being turned away, with two debt agencies refusing new clients because their waiting lists are too long, according to a report from spending watchdog the National Audit Office.

The debt mountain, which includes everything from mortgages to credit cards and personal loans, has soared to record levels and is now equal to about £56,000 for every household, 60 per cent higher than average pre-tax income.

The figures were issued as debt experts warned that a record 150,000 people could to be plunged into insolvency this year  - 15 per cent more than last year.

They said there is usually a time lag between the start of a recession and people losing the battle with their finances.

Mark Sands, head of bankruptcy at the accountants RSM Tenon, said it is not necessarily losing their job which tipped people over the edge, but losing overtime pay or a bonus.

He said: 'If you've got £50,000 of debt on your credit card and you've lost one of your shifts then you are going to hit the end of the line.' 

The Consumer Credit Counselling Service said its typical clients have 11 different creditors and debts of £24,300, excluding their mortgage.

The Government is committed to pumping £143million into providing extra debt advice between April 2004 and March 2011, mainly in free faceto-face counselling.

Most of the money was given to Citizens Advice and some has also gone to other agencies, such as National Debtline. But Tory MP Edward Leigh, chairman of the Public Accounts Committee, called the Government's approach 'a triumph of bureaucracy over practicality.'

The cash distribution has been focussed on face-to-face meetings, the most expensive type of advice, which costs an average of £265 per person. By comparison, phone advice from National Debtline costs £51 and internet advice just £16.

The NAO praised the fact that the Government's debt strategy is proving cheaper than anticipated and helping more people.

The target was to help 261,000 people at a cost of £330 each, but so far 270,000 have been advised at £311 each. But more needed to be done.

NAO head Amyas Morse said: 'The Department for Business, Innovation and Skills project has done well. But demand is outstripping capacity and the department needs to look at ways of reaching even more people.'

Consumer Minister Kevin Brennan said: 'It is crucial that when people are struggling with debt, they seek help as soon as possible. The Government will not hold back from helping those most in need.' 

Source: MailOnline Feb 2010

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