Many people facing insolvency this year

According to a recent report a rising number of people are facing insolvency this year, and numbers are expected to reach record levels as an increasing number of people struggle financially due to lack of income and the threat of job losses during the recession. The prediction comes from the accountancy group KPMG.

It is estimated that around 150,000 people could find themselves entering into debt management plans or going bankrupt over the course of this year, and this is an increase from the estimated 104,000 people from last year. The group said that many of those with a lot of debt will not be able to cope with the economic downturn, leading to the increase in insolvencies.

One official from KPMG said: “By the time people realise the extent of the problems, their total debts would have swelled by interest, charges and more borrowing to cover minimum repayments.”

He added: “Those carrying high levels of debt will be ill-equipped to tackle the effects of the downturn such as a reduction in income or a period of unemployment. Many faced with these difficulties will find that their options may be limited. Formal insolvency will, for many, be the only way out.”