Watch Out For Quick Fixes If You Fall Into Arrears On Your Mortgage.

This is a quote from Frances Walker of debt charity CCCS ( the Consumer Credit Counselling Service), which launched a helpline recently for people in mortgage trouble (0800 138 1111) as the rising cost of living saps their resources. The National Debtline charity, too, reports a 23 per cent increase over the past twelve months in the number of people citing mortgage arrears.

According to Paul Mullins, chief executive at National Debtline, some lenders are being more sympathetic as people face the current reality of decreasing house prices and tighter personal finances: "Attitudes have changed from a couple of years ago. The lenders know that, in the current market, they won't get much for a property repossessed and then sold at auction."

Although lenders are still expecting too much from people in debt difficulty, says Ms Walker, especially those lenders in the sub-prime market. Many are applying pressure and issuing late- payment penalty charges.

Borrowers can be forgiven for resorting to the old maxim "desperate times call for desperate measures". However, some of the more extreme solutions available to people in debt can often backfire. Critics have slated providers of sale and rent-back schemes and IVAs (individual voluntary arrangements) in particular.

An increasing number of people have taken out an IVA in recent years. This is a type of insolvency where the person in debt agrees to repay a certain percentage of his borrowings to the creditor over a given period of time. In some cases, up to 75 per cent of the debt can be written off. However, IVAs are extremely controversial because the companies that act as go-between often impose hefty fees and charge penalties for missed repayments. Some of those in the debt charity and banking sectors have targeted IVA providers, accusing them in effect of mis-selling products and persuading vulnerable consumers to sign up when they may have had better options.

Overall Mr Mullins says that this is not a "magic bullet" solution. "If you can't pay your mortgage, an IVA won't help. Your lender has a secured charge against your property which an IVA can't get you out of. You may be able to reduce your outgoings through an IVA so you can better concentrate on the mortgage, but in reality it is unlikely to work like that."

Even bigger problems can arise for those lured into sale and rent-back options. These schemes promise to fund a proportion of a home's value, usually around 70 per cent, so money can be obtained quickly to repay the mortgage company. In addition, the seller is offered the possibility of remaining in the property as a tenant for at least a year. But Ms Walker says the CCCS sale and rent-back is not recommended as it is "completely unregulated".

Even those in the industry agree there are big pitfalls. "For starters, sellers are offered around 70 per cent of what is, in effect, the purchaser's own valuation of the property," says Dougie Lister, who is chief executive of the UK Housing Alliance, a sale and rent-back "What's to stop the valuation being under the odds. In addition, most only offer a 12-month agreement, at the end of which they can chuck the tenant out." His firm, he adds offers 10- year tenancies and also uses independent valuers.

There is no easy answer for people in arrears. The road back can be a very long one. People should first look at their income – are there any benefits or tax credits that you are entitled to? If you have a spare room, let it out. Then draw up a list of expenses, you can let your lender see it and, as a last resort, you may want to ask for your mortgage term to be extended. Bear in mind that this will cost you more interest. An alternative is to request a payment holiday. "This is a temporary halt designed to give the borrower some breathing space to sort out their finances," adds Mr Mullins. But it's completely at the lender's discretion whether they grant a holiday or not."

Unfortunately, borrowers are at the mercy of their lender and attitudes do vary considerably, reveals Ms Walker. Some lenders expect arrears to be repaid within a year – as well as keeping up the usual monthly repayments. Others lenders may allow longer.

As a rule, repossession proceedings are instigated after three months or so, but some lenders will begin proceedings even earlier than this.

If lenders do go for repossession straight away, the borrower needs to act advises Mr Mullins because the courts favour people staying in their own homes and don't look kindly on lenders who push for repossession too quickly. Unfortunately, les than half of people who face repossession attend the court hearing. Yet for those who do, statistics show that the courts allow 85 per cent to stay in their homes.