Ministers have been urged to give struggling families a year-long extension to personal debt repayments following the coronavirus crisis.
Analysis by debt charity Step Change said the number of people in severe debt has almost doubled since the beginning of the outbreak to 1.2 million people.
Young adults no longer in education and families with dependent children have been disproportionately impacted.
Levels of household borrowing and arrears linked to Covid-19 have risen £10.3 billion since the start of the pandemic - an increase of £4.3 billion since May, research by the charity found earlier this month.
The Liberal Democrats are seeking to extend the time to seek advice and agree debt repayments from 60 days to a year, alongside the rollout of a no-interest loan scheme.
The party’s Treasury spokesperson Christine Jardine said: “Through the wreckage left behind by the pandemic, too many families have fallen into a personal debt crisis.
“Nobody should have to choose between eating, heating their homes, or paying rent to keep a roof above their head.
“The priority has to be keeping people safe and ensuring no one is left behind."
She added: “A one-year breathing space and a no-interest loan scheme for families in problem debt is needed now more than ever.”
The party has tabled two amendments to the Financial Services Bill, which will be considered next week.
