It expects a doubling of debtors who have no realistic hope of recovery, whose only option will be bankruptcy or the new Debt Relief Order.
But it’s not just people on lower incomes who will be hit as increased redundancies, rising costs and the reduction of credit availability start to squeeze Middle England.
TDX Group predicts demand for debt solutions amongst homeowners and higher income earners will continue to rise, forecast to increase by 30% in 2009.
It says the inability to rely on refinancing debts will see a dramatic shift in the way distressed debtors will seek to resolve their financial difficulties.
The combined effect of lower property prices and tighter lending criteria by the banks and building societies will mean fewer refinancing solutions, such as remortgaging and homeowner loans, forcing more people into formal debt solutions such as debt management plans or individual voluntary arrangements.
Mark Onyett, CEO of TDX Group, says: “The combined effects of economic factors, rising unemployment and the continued squeeze on household disposable income plus fewer opportunities to refinance debts or rely on equity release will push more consumers into seeking formal debt solutions and insolvency.
“Sadly, many consumers, particularly those running into debt problems for the first time, find the increasing range of debt solutions confusing. In our survey of consumers, 91% admitted taking the advice of the first adviser they approached.
“But because many advisers offer just one type of solution, consumers may not be getting the right advice for their circumstances. We strongly advise them to “shop-around” for help and to approach firms who can be trusted to provide a broad range of advice.”