A leading accountancy firm has said the rising cost of living is threatening to push struggling debtors "over the edge".
Head of personal insolvency at KPMG Steve Treharne has warned that opportunities to refinance are becoming increasingly limited and many people are being forced to "face the reality" of their debt situation.
The increasing cost of council tax and household bills, combined with the effects of rising interest rates is pushing debtors to their limit, he warned.
"Although many borrowers will be able to ride out the storm, I fear that more individuals will have to take formal steps to deal with their over-indebtedness in the months and years ahead," added Mr Treharne.
The government warns borrowers that ignoring debt is the worst thing to do as the problem will not go away by itself.
It suggests debtors look to increase their income and cut their costs, or seek help arranging an agreement with creditors to repay an affordable amount each month.