Bankruptcy hell during first few months of the year
January 15, 2008
Some experts have stated that the frivolous spending that many consumers indulged in over the Christmas months will now result in bankruptcy hell over the first few months of this year, with the first three months seeing the level of bankruptcies fuelled by over the top Christmas spending.
According to one expert around 28,000 consumers will become insolvent during the first three months of this year, and a third of these are expected to file for bankruptcy directly due to the level of debt that they accrued over the Christmas period.
Mike Gerrard from chartered accountancy firm Grant Thornton stated: “Sadly, many individuals spend up on credit at Christmas and pay no heed to the financial warning bells. Come January, they find themselves in a situation where previous financial woes are compounded by the bills arriving from the festive season and in these situations insolvency becomes the only way out.”
It is not just the level of Christmas spending that is likely to impact on these figures according to some experts. There are also other factors to take into consideration, such as high interest rates on mortgages despite one interest rate reduction in December, increasing energy bills, high food costs, and rising petrol costs. Lending conditions are still very tight due to the credit crunch, which is likely to further fuel financial troubles for consumers.
Gerrard added: “Personal insolvency numbers will move forward at a much faster pace than anticipated. While they may settle down before next Christmas, they will do so having edged closer to a total of 120,000 personal insolvencies for 2008. With the credit crunch yet to fully bite, there are simply not the conditions in place to expect a drop.”
- Is the insolvency road about to get busier? Over recent years more and more people have been turning to insolvency in order to escape mounting debt that they can never hope to repay. The past couple of years has seen an increase in
- Debt management firms may be able to write off debt As most people are aware the level of personal debt amongst consumers in the UK is very high, and with borrowing costs rising, the cost of living on the up, and increases in a range
- Bankruptcies could be fuelled by Christmas spending Many consumers in the UK are still taking stock of the amount of money that they have spent over the Christmas period, and industry officials are now concerned that the level of overspending by some
- Avoid insolvency in 2008 It is at this time of year that many people suddenly realise just what a mess their finances are in, having spent far more than they could actually afford to over the Christmas and New
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