'No solution' for many of those struggling with debt.

NEARLY one third of people contacting a debt charity for help during the second quarter were told there was no immediate solution to their problems, new findings show.

Around 30% of people struggling to keep up with their borrowings did not have enough spare income each month to go on to a debt repayment plan or take out an individual voluntary arrangement, while many could not go down the bankruptcy route or did not qualify for a debt relief order.

Instead, the Consumer Credit Counselling Service (CCCS) told them their best hope was to try to increase their income through making sure they were claiming all the benefits they were entitled to, renting out a spare room, getting a second job or increasing the hours they worked. The charity said the number of people it made this recommendation to had soared to 30%, from just 4% in 2008.

The group blamed the jump on the recent rise in unemployment, which has left many people having to spend more on essentials each month than they have coming in.

It said it had seen a 12% fall in the income of couples contacting it for help in April and May compared with the previous six months, with their average monthly income after tax dropping to pounds 1,814 from pounds 2,067.

But the amount people had to spend each month on essential living costs had stayed the same, meaning the income they had left over to repay debt had dived from pounds 197 to a shortfall of pounds 114 in meeting all of their essential costs.

There was a similar change in the surplus income of single people coming to the charity, with the money they had left over dropping from pounds 111 a month to minus pounds 70.

However, despite not having enough money to take out a repayment plan of IVA (Individual Voluntary Arrangements), under which interest on debt is frozen in exchange for a set amount being repaid each month, bankruptcy was also not an option for many people.

In some cases, people could simply not afford the fees associated with going bankrupt, while in others it would mean they would lose their family home or be excluded from their job, for example if they worked in the financial services industry.

The Government's new debt relief orders were also not an option for many people, as, despite offering a low-cost alternative to bankruptcy for people with debts of up to pounds 15,000, consumers are excluded if they have assets worth more than pounds 300, including any pension savings, rising to pounds 1,000 if they have a car.

Malcolm Hurlston, CCCS chairman, said: "The recent unemployment figures make for gloomy reading.

"We already have evidence that this traditionally lagging indicator of financial wellbeing is making it increasingly difficult for our clients to repay their debts.

"We would expect this situation to get worse, certainly for the rest of this year." The CCCS said it was seeing a "rising tide" of people contacting it for help, following a steady fall in calls up to the middle of last year.

It received 82,782 calls to its helpline during the second quarter, the first time the figure has broken through the 80,000 barrier and well up on the 69,396 calls received during the previous quarter and the 53,779 taken in the second quarter of 2008.

The group said if the current trend continued it expected to receive more than 300,000 calls this year, over 50,000 more than last year.

It also carried out a record number of counselling sessions during the three months, and it expects the total number of sessions for the year to be close to 170,000, 30% more than in 2008.

Around 37,000 people were counselled online during the first six months of the year, nearly as many as the 42,642 people who were helped in this way during the whole of 2008.