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Banks `writing off unprecedented levels of debt`

Banks are being forced to write off record levels of debt because borrowers simply can`t afford to repay the money they owe, according to figures from the Bank of England.

In the second quarter of this year, banks and building societies wrote off £3.5bn of personal debts - around £40m a day. This is the highest level of debt write-off since records began.

The largest proportion of this write-off came from credit card debts, at £2.1bn. This was followed by overdrafts, personal loans and hire purchase agreements (£1.2bn written off). £184m was attributed to mortgage debts.

An expert at the IVA Advisory Centre said: "The Bank of England`s figures show that debt is still a significant problem for many people.

"Debt write-off will often be part of a debt solution such as bankruptcy or an IVA [Individual Voluntary Arrangement]. These are two forms of insolvency that can really help people deal with their money problems, but they both carry consequences that could, in many cases, have been avoided if they`d taken action earlier.

"It`s better to address debt problems early and minimise any effect on the borrower`s credit rating - so we urge anyone having problems with their debts, no matter how serious, to seek expert help."