More UK households are set to struggle with repayment of their debts in the coming months due to a combination of job losses, falling incomes and rising costs, a debt charity has warned.

The Consumer Credit Counselling Service (CCCS) said that a substantial portion of its clients were unable to meet the costs of everyday living, with the situation becoming unsustainable as more households tried to service debt against a backdrop of falling incomes and rising costs.

The charity identified families as particularly vulnerable with households with dependent children needing an additional £650 a month to cover everyday living costs compared to those without. Homeowners meanwhile were also vulnerable as their debt obligations were higher than renters.

According to analysis conducted by CCCS the average client who owns their own home has over £30,000 in unsecured debts on top of their mortgage. Hence a two percent rise in interest rates would lead to a £307 increase in monthly mortgage payments for the charity’s clients across the country.

Lord Stevenson, chairman of CCCS, said: "The picture is undoubtedly bleak and it seems likely that many more families, including better-off ones, will be increasingly prone to over-indebtedness in the months ahead."

Despite the bleak outlook, research by CCCS concluded that average debt levels fell by seven percent in 2010 to an average of £22,476. Demand for debt advice also fell with almost 418,000 people contacting the charity for help compared with half a million in 2009. Credit Today