THE number of households struggling to pay off “problem debt” has soared by 700,000 (28 per cent) over the past three years, research published today showed.

A total of 3.2 million families are over-indebted, compared to 2.5 million in 2012, according to a new report commissioned by the TUC and Unison called Britain in the Red.

Young people, self-employed workers and low-income families have been hit hardest by the rise in debt it stated.

“Problem debt” describes those forced to spend 25 per cent or more of monthly gross incomes on unsecured debt repayments such as credit card balances, store cards, payday loans and overdrafts.

Half of those with this type of financial trouble spend a whopping 40 per cent of their take-home pay on repayments. Those from poorer families account for the majority of this number (1.1 million).

TUC general secretary Frances O’Grady said: “The fact that more and more are getting into problem debt is particularly worrying given the prospect of interest rates going up.

“We need a wages-led recovery that works for everyone not another debt-fuelled bubble.”