The ease with which people can spend money they do not have through credit cards is a contributing factor in the number of people becoming insolvent, an author has warned.

Connecticut College psychology professor Stuart Vyse, author of Going Broke: Why Americans Can’t Hold On To Their Money, said in the modern world, consumers can buy anything they like, regardless of whether they have the money to hand.

He told the Guardian newspaper: "All of the barriers to spending have been removed."

Research published earlier this month by online financial advice resource MoneyExpert.com revealed one in three Britons who have debt are concerned about their ability to repay it.

Despite such worries, more than two million of the country’s debtors have increased their debt levels during the last three months – which the report suggests is the result of Christmas spending.

Sean Gardner, chief executive of MoneyExpert.com, described the findings as "worrying".

Britons have been forced to tighten their spending as a result of increasing bills and high levels of debt, it has been suggested.

A study by Birmingham Midshires into the saving habits of the UK has shown an increased number of people are putting money aside.

However, many have been forced to raid their savings in order to make ends meet, the organisation continued.

Rachel Thrussell, head of savings at Moneyfacts.co.uk, admitted: "The last year has seen many families finances stretched, with many having to dip into their savings to get by."

Figures compiled by financial advice charity Credit Action show that by the end of last year, total personal debt in the UK stood at £1,409 billion.

This is an increase of £120 billion on the previous year and suggests British debt is increasing by £1 million every five minutes.

UK adults pay almost £260 million a day in interest alone, Credit Action notes.

More than 600 people in the town of Weston were forced out of their homes last year as they failed to address their debt issues, it has been reported.

Local newspaper the Weston & Somerset Mercury stated that the soaring number of repossessions is partly down to debtors borrowing money without being fully aware of the risks faced.

Weston’s Liberal Democrat prospective parliamentary candidate Mike Bell told the publication the government should have done more to protect struggling debtors.

He said: "With higher borrowing costs and huge levels of personal debt taking their toll on families, it is inevitable that we will see even more repossessions in the future."

Earlier this month, accountancy giant KPMG predicted a rise in the number of home repossessions across Britain.

Mark Sands, director of personal insolvency at the firm, warned that the economic outlook for the country is bleak and that the repossession figures are likely to become worse before they get better.

In the early 90s recession, a lot of innocent people lost their jobs, homes and credit ratings and some suffered the break-up of their marriages, an expert has stated.

Mary Ann Seighhart, writing for the Times, warned that sometimes financial difficulties can hit even the most conscientious borrower like a "tornado", uprooting their life.

"People who borrowed heavily in the good times find themselves falling behind with their repayments. If they are really unlucky, their home gets repossessed," she explained.

However, if house prices fall then some people could find they still owe thousands even after their home has been forcibly repossessed and sold.

For those who are concerned their borrowing costs could tip them into financial difficulties – such as being unable to afford their mortgages – there are a number of routes out of debt.

One option is an individual voluntary arrangement, usually known as an IVA.

Under such an agreement, the debtor would only repay an affordable amount of their debts each month, potentially freeing up cash to make their mortgage repayments easier.

Lenders could be reconsidering their business following the impact of the credit crunch on the economy and turning down high-risk borrowers, an expert has said.

James Falla, managing director of Thomas Charles, said many creditors are tightening their criteria and considering applications for loans and other borrowing more carefully.

"There are changes in the credit card and store card business – of that there’s no doubt," he acknowledged.

Some borrowers have been relying on credit to meet their living costs and to refinance their other debt, meaning any tightening could gravely affect their ability to manage.

Earlier this month, research conducted by online financial advice website MoneyExpert showed that as many as one in three debtors are concerned about their ability to meet their obligations.

Despite this, it discovered that during the last three months, 27 per cent of borrowers have increased the amount they owe.

The website suggested this could be down to Christmas spending using credit cards.

February is usually the month in which families seek to gain control over their Christmas spending and so lenders "bombard" them with personal loan adverts, an expert has claimed.

James Coney, writing for the Daily Mail, warned debtors who wish to consolidate their borrowing not to just pick an advert as it may not be offering the best deal.

He urged people to shop around and look for the best deal available.

The most important aspect of consolidating debt is to work out exactly how much is owed to how many lenders, Mr Coney continued.

"You don’t want to forget about one and have a nasty surprise once you’ve got on top of your repayments," he warned.

Recent research by Halifax claimed that January is the most popular month for taking out debt consolidation loans.

Neil Chandler, head of the bank’s unsecured personal loans department, said it can be much easier to make one fixed monthly payment rather than worrying about several different creditors.

Britain’s economy has depended so much on credit that the country could now be facing recession, an expert has warned.

Dr Peter Warburton, who sits on the shadow monetary policy committee at the Institute of Economic Affairs, made his comments to BBC Radio 5 Live’s Wake Up to Money programme yesterday, prior to the base rate announcement.

The Bank of England’s monetary policy committee declared shortly after his comments that it was to cut interest rates to 5.25 per cent, the second cut since December.

"Basically the credit crisis hasn’t been resolved … What’s happening is that the availability of credit has been reduced, regardless of the price," Dr Warburton asserted.

While the base rate cut could be good news for many borrowers, for some the relief will come too late.

The rising cost of fuel and food has been stretching some household finances to extremes and some Britons now face the possibility of bankruptcy.

One alternative, however, is an individual voluntary arrangement, also known as an IVA.

These court-approved agreements allow borrowers to retain important possessions such as their home and to become debt-free within a set period, usually five years.

The number of repossessions leapt by a third during 2007, it is expected figures soon to be released by the Council of Mortgage Lenders (CML) will show.

It is anticipated that the organisation is to release statistics which reveal around 30,000 British homes were repossessed by lenders last year, an increase of 32 per cent on 2006, the Associated Press reports.

Lenders would take such action if the borrower was unable to meet their repayments.

Furthermore, it is thought likely that the CML will predict repossession levels rising to 45,000 this year which is an intensity not seen since 1995.

Those who struggle to meet their mortgage because of the high cost of maintaining their other borrowing may be concerned that their debt will tip them into homelessness.

One option for such borrowers is an individual voluntary arrangement (IVA).

Such agreements are settled in court and allow the debtor to repay an affordable monthly sum for a set period of time.

At the end of that period, any remaining debt is written off.

IVAs allow stricken borrowers to retain ownership of important possessions such as their home.

Moves by the monetary policy committee to cut the base rate could be a case of "too little too late" for Britain’s consumers, an expert has asserted.

Personal finance expert at uSwitch.com Mike Naylor argued that it has been a tough year for Britons.

Unmanageable debt led many of them to miss paying bills and repaying debts, he claimed.

The financial comparison site spokesman suggested that one in ten consumers had a direct debit or cheque bounce from their account last year due to insufficient funds.

Furthermore, "nine per cent of people are currently trapped in a vicious circle where they may need to get further into debt to meet existing financial obligations," Mr Naylor warned.

Nearly six million Britons could rely on borrowing just to meet the cost of living, he added.

According to financial advice charity Credit Action, total personal debt in Britain grew to £1,409 billion by the end of December last year.

Debtors who are still struggling to repay their Christmas spending should remain calm and face up to their financial problems, a leading charity has urged.

The Plymouth Citizens Advice Bureau has suggested that those facing money difficulties should avoid borrowing further sums.

It told local paper the Herald that debtors should sit down and work out what their priority debts are, such as mortgage rent and energy bills.

Borrowers must not "fall into the trap" of simply paying the most aggressive or loud creditor first, the local charity continued.

"Only offer to pay off debts at a rate you can keep up – it is easy to be panicked into offering more than you can afford," the bureau concluded.

Debtors who have concerns over their ability to manage their creditors themselves may want to consider a debt management company.

Such firms can negotiate with lenders on the borrower’s behalf and agree affordably monthly payments.

This solution is best for people who have lower levels of debt but find it difficult to manage their repayments.