With the interest rate increased to 4.75 per cent, One Advice believes that the 4.25 million people it claims already having problems with debt management could be affected badly.
Chris Holmes, chief executive of the agency, said he was worried by the 26,000 declared insolvent and expects more to follow: “Today’s figures may be shocking but sadly there is worse to come as more people admit they have to take drastic action to control their debts.
“Our forecast for the rest of the year is simply a case of more of the same with up to 100,000 individual insolvencies expected for 2006. Given the record levels of debt in the UK something has to give.”
His comments come in light of figures showing the 66 per cent increase in bankruptcies this quarter compared to a year ago as people struggle with debt.
However, Mr Holmes believes that something can be done to stop more people going insolvent.
By taking professional debt advice and not “burying your hard in the sand” in ignoring the problem, he believes that a long term solution to repayment worries can be found.