Dec 27 2004
A fresh alert over consumer debt has been sounded as experts warned more than 5,000 people will go bankrupt by the end of January.

Accountants Grant Thornton said the New Year is likely to see record numbers of personal insolvencies, fuelled by people amassing excessive debt on credit and store cards over the holiday.

Bankruptcies are already at record highs as the availability of cheap credit has encouraged millions to rack up debts they cannot afford to repay. Latest official figures show more than 9,000 people went bust in the third quarter of this year, a 28% increase on a year ago.

Mike Gerrard, a personal insolvency expert at Grant Thornton, said: 'For many, Christmas shopping sprees will have a sting in the tail when credit card bills hit doormats in January.

'A little overspend will not break the bank for most but, for an increasing number who are already financially overstretched, the risk of plunging further into a spiral of debt - which may lead to bankruptcy - is real.'

Borrowing is rising 15% a year, smashing the £1 trillion barrier in the summer, yet consumers are continuing to pile up ever more debt.

The National Association of Citizens' Advice Bureaux is seeing more than 1m new debt cases a year, with 70% related to unsecured consumer credit. A spokeswoman said: 'The New Year is the peak for new debt cases. We always see a real panic as people receive their post-Christmas credit-card bills.'