The Midlands faces a growing debt mountain with over–extended borrowers triggering a faster increase in bankruptcies and home repossessions than the rest of the country.
Figures released yesterday showed the number of home repossession orders in the region leapt by 45 per cent between July and September.
Meanwhile the number of bankruptcies increased by 47 per cent compared with the same three months last year.
Both sets of figures were more than double the national average, as the Government statistics showed a record number of people became insolvent during the summer.
The Insolvency Service revealed that a total of 27,644 people went bankrupt or took out an individual voluntary arrangement (IVA) between July and September.
Bankruptcy figures were up 2.7 per cent on the last quarter and almost 27 per cent on the previous year.
The trend was stronger in Midlands, where the number of people declared bankrupt leapt from 636 in the third quarter of 2005 to 933 this year, a rise of 47 per cent.
This compared with 842 people declared bankrupt in the second quarter of this year, confirming that the trend is accelerating.
There were no regional figures for IVAs – an arrangement which allow a debtor to come to a formal agreement with creditors over the repayment of outstanding money without going through the bankruptcy process.
Mortgage repossession orders rose sharply again in the third quarter as households struggled to repay home loans despite rising house prices.
Government data showed orders for mortgage repossessions in England and Wales rose 22 per cent, from 19,694 to 24,017, between July and September compared with the same period last year. But in the Midlands the numbers were far worse, with a 45 per cent increase, from 926 to 1,343.
Analysts said the figures suggested first-time buyers may be stretching themselves too far in order to get a foot on the property ladder.
With UK interest rates on a rising track, the pain for homeowners is only likely to increase.
The Bank of England is widely expected to raise rates to five per cent next week and money markets show investors are betting rates will go even higher next year.
Margaret Farrell, a manager at Birmingham Settlement, a charity which advises people with money problems, said the situation was bound to get worse.
She said: "As a society we are encouraging people to be in debt. In the past there was a culture that nobody borrowed money, but that has gone and people have to have things now.
"The credit industry is being irresponsible in its lending and now people are running out of rope, especially with interest rates likely to increase.
"A small rise will tip people over the edge; people are already indebted it is going to get worse. It is a very depressing picture."