Francis Walker from the Consumer Credit Counselling Service answered your questions in a LIVE forum for the BBC's Six O'Clock news, presented by Manisha Tank.

Consumer debt in the UK has more than doubled over the past seven years.

And mortgage loans have risen by a massive 124% in just five years.

But what happens if you find yourself with debt that you can't pay back?

Many people turn to debt management companies, but new research suggests that the fees charged by these firms almost invariably means that people end up paying more than if they did nothing.

What can you do to avoid debt? Who should you trust with your money? And what can you do if you're faced with debt?

Transcript

Manisha Tank:
Welcome to the Six Forum. We're talking about debt consolidation. What's that, you might ask. Well you've probably seen the slick advertisements telling you that you can change all of your repayments on credit cards and other bills into one lump per month. But it could mean that you're going to end up paying more money and over a longer period of time. So is it a rip-off?

Apart from that question, it also brings up the question debts and are we overloaded with them? How do we deal with them? Here to talk about the issue is Francis Walker from the Consumer Credit Counselling Service.

Manisha Tank:
We'll start with an e-mail from Akmal Malik, London: There are so many companies advertising their services to help those unfortunate people who are in debt. But it is not immediately clear what is being offered. Shouldn't the Government or a consumer watchdog monitor these adverts?

Francis Walker:
The Office of Fair Trading has responsibility for monitoring debt management companies generally and in fact they've set guidelines which all the debt management companies have to follow. Also the Advertising Standards Authority would have responsibility for looking after how debt companies advertise themselves. But of course you're quite right because an awful lot of these ads. - even if they stick to the letter of the law - they are a bit misleading in that they say, for example, this is free advice, we can reduce your debts, etc. and they're making promises which quite frankly, they can't honour.

Manisha Tank:
So effectively we need to read more of the small print. We've just had an anonymous text message come in: I'm currently paying off my debts via a debt consolidation agency. I owe �7,500 - is there a better option for me?

Francis Walker:
I recommend going to somewhere like the Consumer Credit Counselling Service where we can help and we can make arrangements with the creditors and we can come up with a debt repayment plan which will cost nothing.

I would like to make a very important point about debt consolidation. This is not something that we would normally ever recommend because very often once you consolidate your debt, it becomes a secure debt which means that if you default on the payments your house is at risk. So I would suggest that nobody should take out a debt consolidation loan without taking expert advice.

Manisha Tank:
It's no wonder then that a lot of these companies are talking about homeowner loans.

Francis Walker:
That's right. They usually are targeting at the homeowners - and they say things like, response in 24 hours to homeowners. But that's terrible because that's turning your unsecured credit into secured credit and we wouldn't recommend anyone to do that.

Manisha Tank:
Janet, Plymouth: What is the best way to avoid getting into debt?

Francis Walker:
I think we've got to distinguish between debt and credit - we need credit nowadays, credit makes the world go round. Who could buy a house without a mortgage for example? Also, increasingly people have to take out student loans to complete their education. But what we need to do is teach people how to manage debt effectively. It's not so much how much you owe, it is how much you owe relative to your income. A simple rule of thumb is to add up all the money you have to pay, excluding your mortgage, every month and if it comes to more than 20% of your net income, you're probably over-extended and you need to cut back.

Another thing you really ought to sit down and add up how much money you owe. Often people will say, well I think I owe about �10,000 and when they sit down and add it up they owe �25,000 but because the statements come in at different times every month, people don't know how much they owe. So the simple idea of just adding up how much you have to pay out every month is quite a good exercise.

Manisha Tank:
Andrew, Bolton: I'll be starting University next month, and I'm worried about accumulating huge debts. What is the best way to budget? Is a student loan advisable?

Francis Walker:
I think student loans probably are advisable because the rates of interest are very low and the terms under which you have to pay back are very fixed. You only have to start paying back when you're earning a certain amount of money and really the student loans are the best thing that you can do to fund your education. Depending on your circumstances, they may not pay for everything.

In fact the Consumer Credit Counselling Services were thinking how we can set up a special student helpline and train counsellors specially to deal with student debt. Students are a bit different in that graduates usually earn quite a lot more money. You hear stories about people giving up because they're so worried about the debt that they're piling up living like and we want to prevent that from happening so that we can give people some practical advice and help and guide them through it.

You are having people completing their university with debts - the National Union of Students were saying that the average debt is �10,000 and that's an awful lot of money, but hopefully it can be paid back and it can be managed properly. We don't want to stop people completing their education if at all possible.

Manisha Tank:
James Wild, London: People who share a house or flat with friends usually find it difficult to deal with bills. Are there ways of making it easier?

Francis Walker:
Well nothing ever changes - flat shares are always the same - bills and washing up I recall are the difficulties. I think the best thing is if you can agree the terms and conditions before you set up and just split the bills in equal shares. You always have rows because somebody uses the phone more than anybody else - so it perhaps it's a good idea to even think about having a payphone for things like that or a phone that only accepts incoming calls.

But I think it's best to set up simple rules - not so stupid that you can't do anything because you've got to rub along together. But some simple rules about how to deal with the bills: splitting them equally for how many are involved in the flat share and try to get that out of the way before everybody starts otherwise you'll probably get lots of rows.

Manisha Tank:
Joanna, Downpatrick: Can I save money by re-mortgaging my house? How does this work?

Francis Walker:
I think Joanna would really need to take advice on that because I would have to know how much she is paying for her mortgage at the moment. A starting point would be for her to ring her building society and ask if they have lower rates of mortgage - but there certainly are good deals out there. Another good way is checking the personal finance pages at the weekend because they often have very good information about mortgages. But often if you change your mortgage you do have to pay a fee for that so it's really just looking into it and seeing what's the best deal. So I think she should do a little bit of investigating. Certainly nobody wants to pay more for their mortgage than they have to.

Manisha Tank:
We have had the result of our vote. While we've been on air our online viewers have been voting on their finances and telling us about their finances - 48% of you have said that you're paying too much debt.

I thought the answer was going to be 100%. Francis, are you finding that figure quite surprising?

Francis Walker:
I am in a way because it's only about 5% of people who use credit to get into debt - that's still a substantial number of people. But it's good that people are thinking they've got too much debt. Most people get into debt because of change of circumstances not because they're profligate - something like redundancy, shorter working week, unexpected pregnancy - so it's those reasons that people get into debt. It's important that we know how to deal with people like that because it's through no fault of their own and debt is something that can happen to anyone frankly.

Manisha Tank:
An e-mail just in from John Berg asks: I've recently been made redundant and I'm worried about what I can do to cover myself from debt and not being able to pay some, if not all of it, back. Some of my debt carries protection with it but some doesn't. So what are my options?

Francis Walker:
What he needs to do is talk to the creditors and explain that his circumstances have changed. What I would advise him to do is prioritise his debts, which is that he sees that he can pay the essential things like his mortgage, his rent, the electricity, the utilities and then sees how much is left over for the unsecured creditors. He should then work out a budget and then send that to all his creditors, saying this is how much he can afford and this how much he intends to offer them.

He can go to the Consumer Credit Counselling Service and work it out with a counsellor. But he must communicate with his creditors - he mustn't ignore it or the problem will just get worst.

Manisha Tank:
Jane, Pontefract: I am a trainee teacher. My husband works, we have 3 children and own our own house. My only income is a student loan although we also get family tax credit. We are currently struggling to make ends meet and I'm worried that by the time I start work next year, it will be too late to stop our spiralling debts. Is there any way to stop bank charges for a while to let us turn ourselves around?

Francis Walker:
She could, if she approached the creditors, explains her circumstances and said, could you freeze the interest. I'm not saying that they will do it, but they would certainly consider it and some creditors do realise they can't get blood out of a stone and it's a good idea to freeze the interest or freeze the repayments. Sometimes mortgage companies will let you freeze your mortgage for a while. Because she's got a definite plan that she has got another year to do. So she should certainly contact all her creditors and explain her situation.

Manisha Tank:
Gary, Cardiff: I'm 27 years old, and I have around �16,000 debt - not including my mortgage. Am I right to save money and keep paying a steady sum off each debt, or should I just plough all my money into the debts?

Francis Walker:
It's difficult to say off the top of my head without knowing all his circumstances. If he's got a student loan, for example, it's probably good just to keep paying that back. If he's got very high interest - if it's credit card debt and it's quite high interest - he'd probably be better paying it back. We've got very low interest rates on savings at the moment so it's likely that he won't earn as much wherever he's got his money as he's paying out in debt. So I think he probably needs to look at it but I would have to know what his debts were and where he's got his money saving. But probably it's better to pay off your debts under most circumstances.

Manisha Tank:
But in essence this is a person who could do with calling the National Debt Line.

Francis Walker:
Yes, or the Consumer Credit Counselling Service and get some help and advice. It would be very easy for a counsellor to run through his situation and advise him what to do.

Manisha Tank:
Another text message: I am �11,000 in debt but don't own my own home. I need to get my payments down. Is a debt management company my only option?

Francis Walker:
I would say go to the National Debt Line of the Consumer Credit Counselling Service because a debt management company can't do anything for you that we can't do but we won't charge you for it. But this person should get their debts down - �16,000 is quite a lot.

Manisha Tank:
Ian, UK: Being a student on a limited income - why are there so many places giving credit cards to us? I am now �15,000 in debt.

Francis Walker:
I think it's because students are viewed as they are going to be graduates and higher earners and banks have always regarded them as a good risk. You do want to be careful that you don't run up too much debt.

We had somebody who came to us - a young man of 27 years old - and had managed to run up �30,000 of debt because he didn't get immediately employed after university. He was put on a debt management plan and he was going to be in his 40s before he paid that off. Now that's quite a bad way to start off your life. Things would probably get better because he could expect to earn more money and probably be able to pay it back a bit quicker than that - but it's not very nice when you are 27 years old and you'll be in your 40s before your debts clear.

A debt of �15,000 sounds like it might be a little bit much to be carrying so maybe somebody like that should take a bit of advice. But sometimes creditors don't want to lend to anybody who is not going to ultimately repay the debt but students are seen as quite a good risk and also frankly they often need the money to complete their education.

Manisha Tank:
Let's finish with something we can all learn from: what's the best way to repair one's credit rating?

Francis Walker:
To repair your credit rating you just have to be very good and never default on your credit again. That's another thing that they often advertise about credit repair companies in that they can repair your credit and get County Court judgments wiped off against your name - you can't - you just have to be a good citizen frankly for quite a long time and then your credit rating will go up.