Bankruptcies could be fuelled by Christmas spending
January 17, 2008
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 consumers could now lead to a rise in bankruptcies. Many officials have expressed concern that the first part of this year will see bankruptcy levels rocket, and many people are expected to declare themselves insolvent as a direct result of overspending over the Christmas period.
One industry expert has stated that nearly 30,000 people are expected to become insolvent over the first three months of this year, and added that around one third of these would become insolvent because of frivolous spending over the Christmas period.
Experts have stated that in addition to overspending at Christmastime there are also other factors that could see an increasing number of people declare themselves insolvent, and this includes high interest rates and mortgage repayments, higher food prices, increased energy costs, high petrol costs, and more.
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.”
He 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.”
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