Financial concerns can cause "stress and unhappiness" to Britons, particularly following the heavy cost of Christmas, an expert has warned.

James Caldwell, director of Fair Investment Company, suggested debtors create a budget and stick to it in order to bring their finances under control.

He commented that while many Britons are concerned about their tightening belts following Christmas excesses, millions will be worrying about their finances.

"Most money-saving is down to common sense. The less you spend, the further you can stretch your finances," Mr Caldwell continued.

Those struggling to stretch their household income should look at switching credit card provider to take advantage of the best deals or hunting down a more competitive energy supplier, he added.

Last month, Joanne Gills from debt management firm Chiltern warned that six million UK adults are struggling to manage their finances and one million claim they are "seriously overstretched".

She suggested debtors consider an informal debt management plan.

Other options open to those in problem debt include individual voluntary arrangements (IVAs) and consolidation loans.

The recent increases in credit card rates are likely to continue in 2008, according to price comparison site Moneyfacts.

At the beginning of November the firm revealed that there had been a total of 125 increases in credit card rates and fees during the preceding two months.

Samantha Owens, head of personal finance at Moneyfacts, said an increase in rates were the only way credit card providers can make back the money after offering good deals and rates for a long period of time.

People who transfer their credit card balances after Christmas also need to be aware of the transfer balance fee, she added.

The firm reported in November that ten credit cards had increased the cost of transferring balances.

"[Customers should] keep an eye on their credit cards, make sure they check their statements and the little leaflets that are in there, to make sure that the interest rate isn’t going up," advised Ms Owens.

A record number of people will be declared bankrupt or insolvent over the course of next year, according to accountancy firm KPMG.

UK payments association Apacs estimated that Brits will spend a record £53 billion this Christmas. This, along with tighter lending rules, has meant many borrowers will find it hard to manage financially next year, claimed KPMG.

Mark Sands, personal insolvency director for the firm, said: "Those in difficulty will find that their options are becoming limited – formal insolvency will for many be the only way out."

According to the research, over 130,000 borrowers are likely to enter into individual voluntary arrangements (IVAs) during 2008, compared to 110,000 the previous year.

Channel 4 News reports that £1.3 billion worth of debt was written off by creditors this year, as a result of people using IVAs.

This figure is lower than during 2006, where £1.4 billion of debt was cancelled out.

January is the perfect time to sort out debt and manage personal finance, it has been claimed.

Debt counselling service Thomas Charles has announced that although Christmas can be a difficult time financially, it is "psychologically the right time".

James Falla, director of the firm, recommended that people in debt should budget and plan their outgoings in advance by using a spreadsheet.

"Start by putting some money away," he added. "It sounds very simple but in fact the amount of people that don’t do that is quite considerable."

Mr Falla advised people struggling with their finances to always save money at the beginning of the month rather than the end.

Research for Thomas Charles by YouGov found that 15 per cent of Britons are in debt of over £10,000, with men owing more than their female counterparts.

It also revealed that one-quarter of Britons will avoid spending on their credit cards this Christmas.

Tempting discounts in the post-Christmas sales could have a negative impact on the economic situation of individuals and the country itself, a survey suggests.

While the City’s sentiments about 2008 are less than hopeful, consumer confidence in the economy and their own financial situation is still fairly strong, a Guardian/ICM poll found.

The Guardian suggested that a sales purchasing "frenzy" with little regard to possible downturns in the country’s economy, especially in the sub-prime sector, could pose serious problems.

Some 55 per cent of respondents said they were confident about both the wider economy and their own finances, only four per cent fewer than in the more stable economic environment of August 2006, the newspaper said.

It hypothesised that the effect of the credit crunch and interest rates had not yet impacted upon incomes sufficiently for it to be taken seriously.

Director of Thomas Charles debt counselling service James Falla suggested that people struggling with paying off credit cards and other debts could find a individual voluntary agreement a good option.

Some people have been relying on cheap refinancing options to juggle their debt, but that option may no longer be open to them following the credit crunch, an expert has commented.

Beccy Boden Wilks, spokeswoman for the charity National Debtline, said those experiencing financial difficulties could refinance to find a cheaper way of managing their debt but only if they had a good credit rating.

"If that isn’t an option for people anymore, then it could be that we’ll see more people needing debt advice on the other options – which may include insolvency: [individual voluntary arrangements] or bankruptcy," she commented.

Individual voluntary arrangements are formal agreements with a creditor to repay an affordable amount each month for a set period of time, after which any additional debt is written off.

They were created by the government in order to provide an alternative to bankruptcy and allow struggling debtors to retain important possessions such as their homes.

The British Bankers Association (BBA) has announced new standards to be followed by banks and the companies providing individual voluntary arrangements (IVAs).

Chief executive of the BBA Angela Knight said debtors and creditors need to have confidence that when an IVA has been suggested, it genuinely is the most appropriate solution.

The new standards will be in place by February and call for greater transparency, advice and clarity within the insolvency industry.

Ms Knight said that her organisation, the Insolvency Service and participating insolvency advisers "are united in support for this agreement, which should provide customers with the reassurances they need in order to make the right choice for their financial futures".

Research conducted earlier this year by price comparison website moneysupermarket.com found more than half of Britons say they would consider an IVA if they were struggling with serious debt.

However, its survey also showed 49 per cent of the population are not entirely clear on what an IVA is.

The credit crunch is hitting consumer spending hard, with 21 per cent cutting back on their outgoings, a new report has revealed.

A study by Bradford & Bingley (B&B) has shown more than a fifth of people are worried about their borrowing and reducing their spending accordingly.

However, it revealed some Britons, particularly the under-25s, are continuing to live beyond their means.

Paul Whitlock, head of savings at B&B, said: "There are still a number … who are continuing to bury their heads in the sand and are not being deterred by the prospect of higher borrowing costs and a tougher credit environment."

He warned the credit crunch is likely to continue to "bite" next year, adding that it is vital consumers take control of their finances.

For some borrowers, however, their debt has become unmanageable and the future looks bleak. One possible route out of debt is an individual voluntary arrangement (IVA), which clears a person’s debt within a set period, usually five years.

IVAs were created as an alternative to bankruptcy and allow the debtor to repay an affordable monthly sum, and retain important assets such as their home.

Four million people are concerned their credit rating is irreparably damaged following their financial difficulties, a new report has found.

In response to the findings, Steve Folkard of AXA suggested money worries can be a social issue as well as financial.

He said there are a number of ways in which an individual can become blacklisted but that failing to pay bills is a "sure fire way" for someone to make their credit rating worse.

Mr Folkard called upon people to take action to improve their financial situation.

"On an individual level and for the nation as a whole, we need to recognise that decisive action is the only way to solve the problem. Otherwise we will simply spiral further and further into debt," he continued.

For borrowers who wish to extract themselves from problem debt, there are a number of options.

Debt consolidation, informal agreements with creditors, individual voluntary arrangements or the services of a debt management firm are some of the options open to borrowers.

Four out of ten Britons are worried about their Christmas spending, a new report has revealed.

Despite this, the study by Alliance & Leicester has shown that 60 per cent of people view erstwhile luxuries such as bottled water and takeaway lunches as necessities, while 31 per cent are unwilling to cut back on such spending.

Ross Dalzell, manager for savings at Alliance & Leicester, said there are some very simple ways for people to cut back on their spending in order to save for Christmas.

She suggested the two million Britons who consume takeaway hot drinks each day should reduce that to three times a week, potentially saving more than £200 a year.

"To avoid a spending nightmare before Christmas they could look at their regular spending more closely and consider whether they could make some minor changes to their lifestyle," added Ms Dalzell.

However, for some debtors, their spending concerns result from overstretched finances rather than treating themselves.

Many people have found a year of high interest rates has combined with the credit crunch to push up the cost of their debt.

One option for dealing with unaffordable debt is an individual voluntary arrangement, which sets the person debt free within a set period of time and freezes interest repayments.