Some 3.9 million British families do not have enough savings to cover their rent or mortgage for more than a monthThousands of people are being made homeless every year because they are unable to meet their paymentsPeople are bearing the brunt of a 'perfect storm' of rising living costs, falling real wages, low savings and expensive creditUnsecured consumer debt has almost tripled in the last 20 years, reaching nearly £160 billionEssential bills have increased by 25 per cent since 2007, with one in six payday loans now used to pay for an outstanding household bill
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The recovery of the financial slump may be around the corner, but rising personal debt and a soaring cost of living is pushing people's finances to the brink of collapse, a worrying report has warned.Despite signs of a national economic recovery, the Centre for Social Justice found personal debt in the UK remains close to its all-time high of £1.4 trillion, while average household debt now stands at £54,000 - nearly twice the level of a decade ago. Rising personal debt has become a 'significant problem' for people in Britain, with millions of families struggling to pay their rent or mortgage, according to a study by the CSJ.Some 3.9 million British families do not have enough savings to cover their rent or mortgage for more than a month, while thousands of people are being made homeless every year because they are unable to meet their payments, the study found. More than 26,000 UK households were accepted by councils as homeless in the last five years because of rent and mortgage arrears, including more than 5,000 last year, the think-tank said. There are now fears the number of households being made homeless will increase in the coming years should interest rates rise, the CSJ warned. The CSJ's report, Maxed Out, said poor people were bearing the brunt of a 'perfect storm' of rising living costs, falling real wages, low savings and expensive credit that has seen unsecured consumer debt almost triple in the last 20 years, reaching nearly £160 billion. Households in the poorest 10 per cent of the country have average debts more than four times their annual income, the study found, with their average debt repayments amounting to nearly half their gross monthly income.The Bank of England has said it will only consider raising rates when unemployment falls from its current 7.6 per cent rate to 7 per cent.The report concludes: 'Rising personal debt levels represent a significant problem for people in Britain.