The level of 'problem' debt is rising at a faster rate than normal unsecured debt, according to a leading money charity. The Consumer Credit Counselling Service said the level of debt owed by the average person in its debt management plan increased by over 10% to £29,400 last year. Over the same period, total unsecured debt in the UK grew by 5.9%.

The organisation said that the figure suggests that a larger proportion of money lent by banks and building societies last year had become 'problem debt' – money which the borrower struggles to repay.

The CCCS counselled 200,000 people through its helpline last year, up from 166,000 in 2004. Of the people that went through to more indepth counselling – around one in three – the organisation recommended a quarter take bankruptcy.

Chairman Malcolm Hurlston said: 'Although it is bad news that problem debt has increased over and above the rate of unsecured debt growth, more people are finding their way to CCCS to find solutions for their difficulties.

'There were signs from our data over the course of 2005 that debtors are waking up to their financial solutions and seeking help earlier for their debts. We hope consumers prove themselves even more prudent in 2006.'

During 2005, 52,000 people in CCCS debt repayment plans paid off £99.2m to their lenders on 420,000 accounts, a 29% rise on the previous year's figure. The organisation said rising salaries made it easier for people with debt problems to repay.

Copyright © 2005 First Mortgage Trust