The Duchess of York is doing "everything she can" to stave off bankruptcy after falling heavily into debt.
A spokesman for Sarah said the situation was "being managed" and that all her personal debt had been paid, adding: "This issue has been caused by business failings and it is these that are outstanding."
Voluntary bankruptcy is still an option for the 50-year-old, who is thought to owe between £2 million and £5 million.
The Queen is said to be "deeply concerned" about the debts, according to the Sunday Telegraph, and discussed them with David Cameron at a weekly meeting.
The newspaper also reported that Prince Andrew, Sarah's ex-husband, is masterminding "a rescue plan" to avoid the embarrassment of bankruptcy.
No senior member of the royal family has ever been declared bankrupt.
Sarah admitted to cash problems in May of this year after she was filmed accepting money in exchange for an introduction to her former spouse.
Photo: © Rex