Millions of British adults are struggling to cope with their debt thanks to Christmas spending, high mortgage payments and the increasing cost of food, it has been reported.

The Independent has warned that 2008 could see a "record" number of personal insolvencies, which could mean bankruptcy or individual voluntary arrangements (IVAs).

Chairman of the Consumer Credit Counselling Service Malcolm Hurlston predicted a dramatic rise in bankruptcies over the next 12 months. His organisation claims that seven per cent of Britons are suffering "serious debt problems", the newspaper reported.

"Some of them can sort their finances out but some of them need some kind of solution, which might be making voluntary payments; it could be IVAs or it might be bankruptcy," he explained.

IVAs were created to provide an alternative to bankruptcy and allow the debtor to retain ownership of important assets such as their home.

They allow the struggling borrower to make an affordable monthly payment to their creditors and to become debt free within a set period of time, with any further debt being written off.