They say it’s better to give than to receive but this ethos has seen Christmas spending soar and this over-reliance on credit will lead to record levels of insolvency.
Spending at Christmas invariably spirals out of control as shoppers are tempted by big savings, especially in the online market. This spending has seen an unprecedented amount bought on credit which will inevitably have the knock-on effect of insolvency for many when payments are not met.
Insolvency – What Comes Next
Many experts predict that the first quarter of 2008 will see 9,000 people experiencing insolvency or filing for an IVA. The over-spending of consumers this Christmas, coupled with the current credit crunch, has led experts to predict that 120,000 people will experience insolvency in 2008. This would represent a 9% rise in those claiming insolvency from the 110,000 in 2007. Insolvency expert, Mike Gerrard states, "many individuals spend 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 and insolvency becomes the only way out".
Insolvency – An Ongoing Concern
The issue of insolvency, despite the recent commotion about Northern Rock, is not a recent phenomenon. Statistics show that 4.4 million people are still paying off debts from Christmas 2006 which led Gerrard to state, "I'm not surprised people want to carry on spending. But I am surprised people had the money to spend. Evidence suggests that credit has already tightened due to the credit crunch". As a consequence of this continued spending, insolvency is set to soar in 2008.
Insolvency – More Than Meets The Eye
It would be naive to suggest that overspending at Christmas is the only cause for the expected surge in insolvency in 2008. There are many contributing factors and the Bank of England has already warned that the proportion of households struggling to meet debt repayments is at its highest in almost 15 years. The problem here so far as insolvency is concerned is that many people have relied on re-mortgaging their homes to fund shopping sprees but this option is no longer available as the housing market has come to a standstill.
Talk To Varden Nuttall About Insolvency
Varden Nuttall has been established for over 15 years and is dedicated to helping people in financial difficulty find a debt management solution through an Individual Voluntary Arrangement (IVA). Employing 90 people, including trained and skilled IVA administrators, we are one of the largest IVA companies in the UK and handle over 3% of all IVA applications. To find out more about the company, or to make an appointment to talk about putting an IVA in place, call us today on 0800 031 9802 or fill in our online enquiry form.