Two thirds of Britons with bad debts are in denial about the extent of the problem, according to debt management firm Chiltern.

Unsecured debts are the problem for many, with one in 16 spending a quarter of their pay on these - which could lead them to think that other loans would also be problematic.

But while there's a range of mortgages available for those with bad credit ratings, Britons still aren't being realistic about their situations, the study found.

Just one in 45 thought they were seriously overstretching despite the above figure, Chiltern has asserted.

"Anyone who is paying a quarter of their income to service unsecured debts should get help to put those repayments on a sustainable footing before the situation gets worse," advised Joanne Gill from Chiltern.

"“What is vital in a financial environment of borrowing, increasing interest rates and multiple sources of credit, is a level of personal engagement with our money," said Julia Dallimore of Picture Financial, responding to the figures.

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