New year ‘will see soaring insolvency rates’

Insolvency rates across the UK will soar during the early part of this year, according to the latest predictions from accountancy firm Grant Thornton.

The company’s personal insolvency practice is convinced that a total of around 110,000 Britons will be declared insolvent during 2008 and that more than a third of these cases will be recorded in the first three months of the year.

It is thought that the scale of personal loan and credit card debt accumulated over the Christmas period has been largely to blame for a significant rise in the number of people struggling to become debt free.

Mike Gerrard, head of Grant Thornton’s personal insolvency practice, commented: “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.”

In early November last year, Grant Thornton suggested that the third-quarter drop in insolvency rates only served to conceal the “gathering storm of personal debt” in the UK.