'I welcome the crunch: it's shut off the easy loans that destroy lives'

Antcliffe is helping the Tomlinsons negotiate with Black Horse, but if that fails, they will file for bankruptcy - provided they can scrape together the £1,000 for court fees and deposit for the receiver. The couple's 32-year-old daughter, Michelle, who suffered from epilepsy, died last month, and Anthony says all the money troubles have meant that he and his wife have not had 'time to grieve properly'. He says: 'They shouldn't have lent us the mortgage in the first place.'

Antcliffe has another client whom few would consider a valid mortgage applicant. Karen Smith (not her real name) was 19 and working as a waitress earning £650 a month, and her then partner, aged 21, was earning £900, when they borrowed £77,500 without a deposit from another sub-prime lender to buy a home. Two years on, both are unemployed, Smith's partner has left her and she is expecting her second child.

Smith has moved back in with her parents and is trying to sell her house - valued at £90,000 - but it has attracted no viewings. Karen says: 'The worst thing I ever did was buying a house, but everyone makes it sound like it's brilliant.'

Lorry driver Ronald Uppington's home should have been secure: his wife suffered a heart attack six years ago and her critical illness policy paid off the mortgage. But Ronald still had credit card debts, and he borrowed more to keep the household going while his wife recovered. 'We borrowed on credit cards and a loan to pay off the credit cards and then used the credit cards again. We were borrowing to keep the payments going,' he says.

The couple, who between them earn £28,000, now owe £115,000 to HSBC for three loans; £31,000 to sub-prime lender Firstplus (which lent to him at the age of 59 on a 12-year term, meaning he would have been 71 when the loan was paid off), and £36,000 on credit cards. Although the Uppingtons found a buyer willing to pay £121,000 for their home, they are in negative equity and Firstplus refused to allow the sale.

On Wednesday, the couple will file for bankruptcy. 'This will clear the negative equity and the other debts will be wiped clean,' says Antcliffe, but Ronald expects he will have to hand over about £500 'surplus' income to the court every month for the next three years, and the family (they have two sons, aged 13 and 11) have moved into rented accommodation. Ronald says: 'I don't like going bankrupt because I'm an honest person and I've always tried to pay my way. But it will be a relief.'

HSBC says its lending was within its 90 per cent loan-to-value ratio and the couple's income was enough to support the loans. Firstplus, which then lent £31,000, says: 'We have received a complaint from Mr Uppington and have asked for more details. We would urge him to make direct contact with us so we can investigate fully. It would be inappropriate to comment further at this time.'

Antcliffe, who has worked for Citizens Advice since 1994, says: 'The banks have acted as a secondary welfare state. I'm not sure how people are going to adjust to living on their income again.'

The not so-easy-option

Some have blamed the recent surge in bankruptcy figures on the government's decision to reduce to one year the period for which your credit record must show you as having been bankrupt. But, as each year's credit record is kept for six years, the information regarding your bankruptcy would still be available to potential lenders even after the year in which you were declared bankrupt is up.

Nor is it a cheap option: people filing for personal bankruptcy pay £150 in court fees, plus a further £345 for the official receiver. Suman Antcliffe of Burton upon Trent Citizens Advice says she has had clients who asked family or friends to pay their bankruptcy charges in lieu of a birthday or Christmas present.

From April next year, it will cost £100 to file for bankruptcy for people who qualify for a debt relief order. They must have debts of less than £15,000.