Millions of people are feeling the strain of high levels of personal debt and low levels of disposable income, a politician has warned.

Deputy leader of the Liberal Democrats Vince Cable has claimed household debt is now 160 per cent of income, in a climate with "little economic optimism".

"After ten years of Gordon Brown blithely ignoring the growing crisis of personal debt and irresponsible lending, the chickens are finally coming home to roost," he said.

For Britons who agree their purses feel pinched by high levels of debt repayment and who are concerned they could become bankrupt if the cost of their borrowing rises, one option could be an individual voluntary arrangement (IVA).

An IVA is a legal agreement with creditors which can be arranged as long as the creditors who own 75 per cent of the debt agree.

It was created as an alternative to bankruptcy and allows borrowers to become debt free within a set period of time, often five years.