INCREASING numbers of penniless people are having their homes repossessed and their small businesses plunged into danger as the credit crunch bites, debt councillors warned today.

INCREASING numbers of penniless people are having their homes repossessed and their small businesses plunged into danger as the credit crunch bites, debt councillors warned today.

Advisors at Felixstowe's Citizen's Advice Bureau said in the past year they had dealt with clients with debts totalling £1.87 million - and were anticipating a very busy year ahead.

Most of the problems were connected with mortgages, but also covered unpaid tax and child maintenance, council tax and utility bills.

However, the biggest area was outstanding credit card bills and unsecured loan payments.

CAB manager, Barbara Rose, said: “We are expecting even more repossessions and a busy year ahead as far as our workload goes.”

She said the amount of outstanding debt dealt with in the first four weeks of April this year compared with the same period last year was up 38 per cent - £158,523 compared with £114,706.

The bureau, in Orwell Road, dealt with 14,000 inquiries last year with nearly 2,000 of those concerned directly with debt.

Julie Waters, a money adviser at the bureau, said media reporting of the credit crunch had heightened awareness of the problem.

“This bureau has already seen a 30pc increase in debt clients in the last quarter,” she said.

“We are seeing more clients who are unable to maintain their mortgage payments and facing repossession proceedings.

“Also, we are seeing an increasing numbers of clients with small businesses who are struggling to manage and seeking money advice.

“The latest interest rate increases have meant that those at the end of their fixed rate mortgages are having to find considerable extra income which is then impacting on their ability to budget.

“We foresee that clients who own their properties and have priority or secondary debts will be facing particularly difficult times either through repossession, creditors instigating bankruptcy proceedings or seeking orders for sale or charging orders.”

Carolyn Howell, of the National Homelessness Advice Service, said research by Shelter showed six million people were suffering depression or stress-related illness because of rent and mortgage costs.

Repossessions were up 17 per cent in the last quarter and were expected to hit 45,000 this year.

Have you been hit by the credit crunch? Write to Your Letters, Evening Star, 30 Lower Brook Street, Ipswich, IP4 1AN, or e-mail EveningStarLetters@eveningstar.co.uk