Londoners face the highest average debt in Britain, thanks to wages failing to match the rising cost of living, it has been claimed.

A recent study by credit reference agency Callcredit revealed Londoners are forced to use credit to help them gain a foothold on the property ladder and to meet council tax bills.

Owen Roberts, spokesman for Callcredit, said: "The increasing cost of living in London isn’t being matched by corresponding salary increases, which leaves people relying more on credit than savings."

An option available to borrowers struggling to repay their debts is an individual voluntary arrangement (IVA), which is a legal agreement to repay debts either in part or full.

IVAs need to be set up with an insolvency practitioner who will negotiate with creditors on the debtor’s behalf.

Such agreements usually aim to help the borrower be debt-free within a set period of time, usually five years.