Christmas Bills lead to Bankruptcies

Accountants Grant Thornton warned that excessive Christmas spending will account for a third of all insolvencies in the first quarter of 2008, forecasting in excess of 10,000 insolvencies a month as the year progresses. 110,000 individuals declared themselves insolvent last year, a sharp rise on 2006 when insolvency cases broke the 100,000 barrier for the first time. That trend is set to continue.

Mike Gerrard, head of Grant Thornton’s personal insolvency practice, said:

"Come January, many people 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.".

Britain's total personal debt now stands at £1.39 trillion, and consumers are paying out £93bn a year in interest on loans, credit cards, overdrafts and mortgages.

Many people could save money by opting for cheaper forms of borrowing - but with many banks and other loan providers tightening their lending criteria in response to the credit crunch, those with less than perfect credit histories are finding it increasingly difficult to obtain credit.

Chris Eagle, Commercial Manager at CreditChoices.co.uk, urges you to keep your credit file in line:

‘Lenders will be unwilling to take you on in 2008 unless you have a blemish free credit history, and such misdemeanours as missing payments or applying for several loans in a short space of time will definitely count against you. If you feel that your credit file is a misrepresentation of your current financial status and approach to loan repayments, then contact a credit checking agency and they will help you resolve any issues on your file’.

Related article - 10 tips to improve your credit rating.

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