|PIC1|Britons have "problem" unsecured debt of 25 billion pounds and the credit crunch could double the number of people succumbing to debt woes this year, according to a report.

Debt management company TDX Group estimates that one million people are struggling to cope with an average of 25,000 pounds-worth of unsecured debts out of a total UK consumer debt mountain of 1.4 trillion pounds.

That could see the number of people taking out individual voluntary arrangements (IVAs) - an alternative to bankruptcy, which allows people to settle debts with less damage to their credit rating and employment prospects - double this year.

Last year, 400,000 people entered into IVAs and debt management schemes.

The report, "UK problem debt - consumer crisis or efficient market?", warns that there will be fewer refinancing solutions - such as re-mortgaging and homeowner loans - available to those struggle with debts, as banks and building societies tighten their lending criteria.

Other economic conditions, such as a slowdown in house price growth and increase in personal inflation, will also serve to stoke the figures.

But Mark Onyett, chief executive of the TDX Group, said many people were choosing the "wrong" solution for dealing with problem debts.

"This might help explain why we estimate up to 45 percent of individuals entering into an IVA don't complete them, with some 15 percent failing in the first year.

"This can leave the customer worse off because the fees paid to an IVA company vary from between 5,000 and 9,000 pounds - and these come from the debtor's repayments.

"These issues need to be addressed urgently as we expect strong growth for the debt management market during 2008."

He said a simplified IVA - SIVA for short - due to be introduced on October 1, would create a simpler, lower cost environment for insolvency practitioners, which would "make a huge difference in terms of the quality of service provided".