Banks braced for record debt defaults in the New Year

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By Philip Aldrick

January is traditionally the worst time of year for debt defaults, according to the credit checking company Experian. The recent surge in unemployment and personal insolvencies will make the first quarter "the busiest period ever", the company said.

"Christmas is a catalyst for delinquency and bad debt, with credit card and overdraft debt traditionally peaking in the New Year," Simon Waller, Experian's head of collections for UK and Ireland, said.

"Economic indicators and feedback from our collections clients suggests that the first quarter of 2010 could be the busiest period ever seen."

Experian is anticipating the worst due to the 771,000 job losses in the first nine months of the year, a 94pc increase on 2008, and the record quarterly personal insolvency rate of 41,390 for the three months to September.

Banks have also been cranking up their marketing to households in the run up to Christmas. The Call Prevention Registry has seen a 50pc increase in "nuisance calls" from debt management organisations in the past month trying to persuade customers to take out new loans.

Banks braced for record debt defaults in the New Year - Telegraph

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