Christmas overspending has triggered a dramatic surge in demand for individual voluntary arrangements, says personal insolvency specialists W3 Debt Solutions.
Research from the Begbies Traynor Group subsidiary found a 58% rise in demand for IVAs in December 2006 compared to the previous December.
It warns that early indications in January already point to 2007 being a record year for personal insolvencies, with enquiries already on trend to be more than double the December numbers.
Demand for debt advice is particularly strong among the young, with people aged between 30-40 accounting for almost four in 10 of those with serious financial troubles contacting W3 Debt Solutions for help.
The latest figures released in November from the Department of Trade and Industry recorded a 119% rise in the number of IVAs since Q3 2005.
Despite the rising popularity of IVAs, W3 Debt Solutions chief executive Greg Mullarkey says credit card companies and banks have developed a hardening in attitude in the last three or four months towards this debt solution.
He warns these lenders are much less willing to enter into IVAs than they had been previously, fearing that they are being seen as the easy option to escape debt.
Mullarkey adds: If creditors continue to adopt a harder line on IVAs, we foresee a lot more people going down the bankruptcy route this year.
While in some instances bankruptcy may be the most appropriate measure, in others it is not.
“If you are heavily in debt make sure you get the right advice.
But be warned, bankruptcy still carries considerable social stigma and will affect a persons ability to get credit, including credit cards, loans and mortgages.
“It may even affect their ability to rent property.
The best advice is dont spend beyond your means, although this hasnt been heeded by those whove already splashed out on a Christmas they couldnt afford.