It may be Europe's cultural capital, but the people of Liverpool are paying a high price

In just a few days, Liverpool will officially be declared the European Capital of Culture. But, as the sun rises on the new year, the city could soon acquire another, unwanted, title: Britain's capital of debt.

As the credit squeeze hits hard in towns and cities across the country, figures suggest Liverpool could be hit worse than most.

Research by debt agencies in the city has revealed that the average debt of clients seeking advice on personal debt in the north-west city has now hit 50,000 per person double the sum that was quoted in 2002 and well above the national average. All of the city's debt agencies have reported a marked increase in inquiries during the traditionally quiet Christmas period.

And the figures of debt reported in Liverpool are on credit cards alone. With a growing number of the city's residents finding themselves in arrears on their mortgage payments, debt experts say they fear that house repossessions in Liverpool will soar during 2008.

Debt centres such as the one at Liverpool Specialist Advice Service, a consortium of the city's Citizens Advice Bureaux, say they have been inundated with calls from people over the festive period a time when people traditionally adopt the "spend now, worry later" attitude wanting advice on how to manage their debt. Last year, according to a Mori survey, Liverpool featured in the top 10 areas in Britain suffering from high financial stress levels.

Rachel Howley, of the LSAS, which has 22 debt advisers throughout the city and on average deals with 6,000 clients a year, said: "There is a huge demand for our service at the moment and that is quite unusual.

"This consortium has been going for nine years, and around this time of year we always see a lull, usually between the end of November until the end of January. This year, that hasn't happened and we are fully booked up until mid-January. We're seeing a huge increase across the whole city."

In an interview with the Liverpool Daily Post, she added: "Five years ago, the average person was coming to us with credit card debts of 25,000, and that has at least doubled some people are in excess of 60,000 in debt just on credit alone.

"In addition to that, we are seeing more and more clients with mortgage arrears, where the market makes people really stretch themselves. We are expecting more repossessions in the new year."

The Legal Services Commission in the city also deals with debt problems. It too says that the number of people in Liverpool calling their help lines has risen. And it says a rise in personal insolvencies in the city is inevitable unless debt is managed better.

John Binks, acting regional director for the Legal Services Commission North West region, said: "Christmas debt can mean a choice between not eating or having the power cut off when the January bills arrive.

"Our debt helpline sees a huge spike in callers suffering from unmanageable debt in January, and it doesn't have to be the case.

"Getting help with claiming the right benefits and professional help planning Christmas finances can help avoid people getting behind on payments.

"Any family needs to budget for expensive times like Christmas and new year, but for families who will really feel the pinch it is essential to get the right advice."