The New Year is traditionally a period that sees higher than usual debt defaults. This is largely attributed to overspending across the festive season. However, credit agency Experian is warning of particularly high defaults in January 2010.
The first 9 months of 2009 saw 771000 people lose their jobs. That is a massive 94% increase on the same period of 2008. Add this to the record insolvency statistics also announced this year and it seems we have all the ingredients for some disastrous debt issues as the new year arrives.
What doesn’t help the situation is that debt management companies, loans companies and even banks increase their marketing in the run up to Christmas, seizing the opportunity as more consumers look to find some extra cash to see them through the season. Calls to households from lenders offering extra cash have risen 50% over the last month, according to the Call Prevention Registry and the Citizens Advice Bureau reports dealing with over 9000 calls every single day from those seeking advice about debt problems.
Experts are advising consumers to approach debt management carefully, to budget conservatively and to avoid high interest credit cards as a means of supplementing Christmas spending. However, during what is largely a commercial and consumer driven holiday, it seems unlikely that we’ll entirely avoid the debt associated with it.