An estimated four million people have taken on too much debt but two-thirds of them are in denial about their financial situation, a survey showed today.

One in 16 people in the UK spends more than 25% of their wages on unsecured debt repayments each month - the official definition of being overindebted, but only 2% of people admitted their household finances were seriously stretched.

People aged between 35 and 44 are most likely to be struggling with high levels of debt, with 11% paying out more than 25% of their income in repayments each month, according to debt management group Chiltern.

Men are slightly more likely to be overindebted than women, at 6.8% compared with 6%, but they are also more likely to admit they are facing financial difficulties at 2.5% compared with 2%.

Chiltern spokeswoman Joanne Gill said: "There are lots of people who are officially overindebted, but two-thirds of them don’t think they have a problem.

"Unfortunately debts don’t go away, they need to be repaid and ignoring them will just make the situation worse.

"Anyone who is paying a quarter of their income to service unsecured debts should get help to put those repayments on a sustainable footing before the situation gets worse."

People in East Anglia are most likely to be in denial about their financial situation, with just 0.7% considering themselves to be overstretched, despite the fact that 12% are spending at least 25% of their pay on repayments.

Those living in Lancashire are most likely to admit they are struggling at 4%.

• Nems questioned 1,000 people during March.