According to the credit checks agency Experian, January is traditionally the worst time of year for debt defaults with the company saying that the recent surge in unemployment and personal insolvencies will make the first quarter “the busiest period ever.”

Simon Waller, Experian’s head of collections for UK and Ireland, said “Christmas is a catalyst for delinquency and bad debt, with credit card and overdraft debt traditionally peaking in the New Year. 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 94% 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 50% increase in “nuisance calls” from debt management organisations in the past month trying to persuade customers to take out new loans.

Mr Waller said: “With unemployment at its highest since 1996 and record numbers of redundancies and insolvencies, it is vital for collections departments to do everything to ensure that their people can cope with the influx of new cases.”

Banks Urged to Prepare for New Year Woes is a post from: Federal Management