The practice of insolvency
Unwise and excessive Christmas spending will force more than 10,000 people to declare themselves insolvent in the next few months, according to a recent report.
Far from being able to compare saving accounts, many consumers have denied themselves the chance to save at all by their ruinous financial behaviour, and accountants Grant Thornton, the firm that commissioned the report, said that 2007 will almost certainly witness more than the 100,000 insolvencies declared last year, with 30,000 expected before April alone.
“Last year, during the period straight after Christmas, when most bills started to hit the doormat, we witnessed the highest ever amount of people going into personal insolvency,” said Mike Gerrard of Grant Thornton.
“We regularly see people, especially over Christmas and with the start of the sales, add to their problems in quite a substantial way. This year things could be even worse,” he added.
By acting in this way, and not considering saving and investment for their money, last year saw a 55% rise in the numbers of people being forced to declare themselves insolvent.
More people are resorting to Individual Voluntary Arrangements (IVAs) – deals between debtors and their creditors, and overseen by an insolvency practitioner, to avoid actual bankruptcy – a practice that many of the big banks and other lenders claim have forced them to write off billions of pounds in loans and credit card debts.