And it said the number of borrowers had risen partly because the borrowing plan only recently became available.
Increasing consumer debt over the past five years has resulted in a significant increase in the number of borrowers entering into IVAs after finding themselves unable to stay on top of the cost of borrowing.
But over all, the number of borrowers falling behind is growing.
The number of borrowers who had fallen into arrears also fell during the quarter.
The number of borrowers coming off low payments will peak in 1999 and 2000.
While fewer people are beginning default, the number of borrowers who are seriously distressed is rising.
But as the economy falters, the number of borrowers in default grows, magnifying the banks' bad loans.
The number of borrowers that fell behind on their payments was "abnormally high," according to the lawsuit.
Now, with recession looming, the number of borrowers defaulting on these loans is almost bound to increase.
At the same time, the number of borrowers due to repay is estimated to rise from 3 million in 2012/13 to 6.5 million in 2042.
The number of borrowers with the top rankings, which Moody's calls "gilt edged," has dwindled as companies sacrifice credit quality to bolster their share prices.
