The Britons who fail to budget for their Christmas spending are often those using credit to pay, a new report has warned.

A study by Halifax has revealed the average UK adult is to spend nearly £400 on presents alone this December and only a third plan to set themselves a budget.

Such a lack of planning often suggested the person was overspending and becoming indebted, the report warned.

A recent survey of debt by Chiltern revealed the average debtor owes more than £26,000 to eight creditors.

Joanne Gill, spokeswoman for the debt management company, said: "Debt is a source of constant stress for many families as they juggle their credit commitments to maintain their minimum payments and spiral further into debt."

She warned that many borrowers feel under pressure to spend money on Christmas even if they cannot afford to.

One option open to those struggling with debt is to seek advice from a debt management firm. Such companies can liaise with creditors on the debtor’s behalf and arrange affordable monthly repayments.

There could be a "sharp increase" in the number of homes being repossessed during 2008, an expert has warned.

Ray Boulger, senior technical manager at mortgage adviser John Charcol, said that as interest rates are high and many lenders have tightened their criteria following the crunch, those with bad credit ratings may be unable to remortgage.

Such homeowners would be forced to remain with their current lender and pay higher rates, he continued.

"A lot of them just won’t be able to afford that, and they can’t remortgage because of the way the lenders have tightened their criteria – then they are really between a rock and a hard place," Mr Boulger warned.

The Council of Mortgage Lenders has recently commented that it expected arrears and repossessions to rise during 2008 because of the number of short-term fixed-rate deals coming to an end.

However, it warned the trend will be more pronounced as a result of the credit crunch.

More than 4.4 million people have still not cleared their borrowing from last Christmas, a new report has warned.

Price comparison website MoneyExpert.com has conducted research which shows one in ten credit card customers have not yet fully repaid last year’s festive borrowing, and it warns they could be paying a considerable amount in interest.

Sean Gardner, chief executive of MoneyExpert.com, commented that some people should cancel their credit cards this year to avoid overspending.

He said if debt "lingers" from year to year, it suggests the borrower is in trouble.

"With lenders getting tough that is not a good position to be in. If you’ve not cleared the debts of Christmas past it is time to face up to the future," Mr Gardner concluded.

The government advises those seeking to become debt-free to consider options such as consolidating debts, making informal agreements with creditors, applying for an individual voluntary arrangement or using the services of a debt management firm.

People’s finances are becoming increasingly stretched and Christmas could cause problems unless shoppers plan carefully, a national charity has commented.

Citizens Advice has warned that each January its bureaux see a "surge" in the number of people seeking debt help and information on bankruptcy.

Teresa Perchard, director of policy for Citizens Advice, acknowledged it can be easy to overspend at Christmas by making "spur of the moment" purchases.

However, she warned: "Every year, we see a huge increase in debt problems immediately afterwards. With a little forward planning, Christmas panic buying can be avoided."

Earlier this year, Citizens Advice reported that 2006-07 saw an increase of 20 per cent in the number of people seeking help with problem debt.

It claimed some creditors were guilty of acting irresponsibly by lending to people who cannot afford their repayments.

Ms Perchard said last month that personal debt is one of the biggest issues the British economy faces.

Over-indebtedness can cause ill-health, depression and a financial downward spiral, an expert has commented.

Health editor of the Western Mail Madeleine Brindley has warned that consumers are "bombarded" with adverts calling on them to buy now and pay later.

She suggested that over-indebtedness is not necessarily down to bad money management but can strike those on low incomes as a result of high bills or one-off essentials.

"Those who find themselves facing over-indebtedness often experience adverse affects on their physical and mental health such as depression, low self-esteem, breakdown of relationships, and in exceptional circumstances loss of jobs," warned Ms Brindley.

A recent survey of debt levels in Britain by Chiltern revealed the amount debtors can afford to repay their creditors has fallen, but the amount they are obliged to pay has remained the same.

It called upon struggling debtors to seek help managing their creditors through a debt management firm.

Two-thirds of people having to remortgage following the end of their fixed-rate deals plan to cut back on their Christmas spending in order to meet the cost, new research has revealed.

Lloyds TSB conducted research which found seven out of ten remortgagers believe their monthly repayments are set to rise when their deal ends and cutting down on the cost of Christmas was a popular tactic for saving money.

Alison Burns, director of network mortgage sales at Lloyds TSB, said: "Cutting back on festive spending offers a short-term solution but it’s a good idea for people with mortgages to take a longer-term view of their financial situation."

Many experts have recently speculated that those with sub-prime mortgages face being unable to refinance their homes and so being hit with extremely high borrowing costs from their existing lender once their fixed-rate deal ends.

Debtors facing repossession if they are unable to meet higher mortgage costs because of other repayments could consider an individual voluntary arrangement (IVA).

The government created IVAs to provide an alternative to bankruptcy and they allow debtors to make affordable monthly repayments to their creditors and retain key assets such as their home.

Britons are cutting down on luxuries and working longer hours to provide for their loved-ones in the wake of the credit crunch, new research has shown.

A survey by Engage Mutual highlighted that disposable income is at its lowest in ten years but revealed that among couples who share their finances, 88 per cent would cut back on their own costs to allow their partner to continue their normal spending.

Karl Elliott, spokesman for Engage Mutual, said: "It is encouraging that rather than taking on further debt, people are prepared to work longer hours and cut back on spending in order to treat their partner."

Financial pressure can affect some relationships, he continued.

A recent study by financial advice website Fool.co.uk showed one in six Britons have lied about their borrowing and nearly a third pretend luxury items cost less than they actually did.

It revealed one in five people become so stressed over their finances, they say they "want to disappear".

Debtors in Shropshire owe £20 billion as a result of borrowing on loans, credit cards and for housing, it has been claimed.

The Citizens Advice Bureau Shropshire has warned an increase in debt is leading to an increase in homelessness, the Shropshire Star reports.

Liz Warren, service director for CAB Shropshire, said her organisation is negotiating with landlords and mortgage providers where it can to prevent homelessness.

"Debt can cause serious problems for people and affect every aspect of their lives," she warned.

The government advises that there are many routes out of debt for those struggling with their finances and urges borrowers to take action sooner rather than later.

It highlights options such as informal agreements, individual voluntary arrangements, debt consolidation and seeking the help of a debt management company.

Bankruptcy is a "serious matter" and can mean debtors lose possessions such as their home, however, not all debtors become bankrupt and there are other solutions, the government’s debt advice page explains.