Borrowers rack up unsecured debts amounting to 113% of their annual income before they take out debt management plans, new figures have revealed.

Chiltern Debt Management, which helps people set up informal plans, said the average person looking for help has run up debts of £26,608 with eight different creditors on credit cards, overdrafts and loans.

But a study found they only earn an average of £23,535 a year.

The group said debtors can only afford to pay back an average of 26% of their contractual payments to their creditors. It means that for every £1 they owe in monthly repayments, they can actually afford only 26p.

Chiltern said it will take an average of 145 months - or 12 years - to become debt-free by making repayments at affordable levels.

But it added many people do increase the amount they repay during the life of agreement as their circumstances change.

Debtors taking out one of the plans have average monthly living costs of £1,083, meaning they have to make repayments from a monthly disposable income of £231.

The average age of someone entering into one of the plans is 43, and women are slightly more likely than men to be taking them out, at 58%.

Chiltern sets up informal debt management plans for people having trouble keeping up with their repayments by looking at income and expenditure and assessing how much clients can afford to repay each month.

Joanne Gill, head of marketing at Chiltern Debt Management, said: "People who enter into an informal debt management plan can only afford to pay 18% of their net income to service unsecured debts but are contractually obliged to pay out 69% of take-home pay - a completely untenable situation.

"Creditors are generally seen as the bad guys when a person cannot afford their debts.

"But our experience is that they treat customers with genuine difficulties sympathetically and positively and recognise that by engaging an informal debt management service, the debtor wants to repay their debt."

Copyright © PA Business 2007