A report that was recently released by KPMG claims that the number of people that face insolvency over the course of this year could soar to record levels, as the global credit crunch coupled with the recession and huge job losses wreak havoc across the nation.

Officials from the firm have now predicted that around 150,000 people in the UK will enter into debt management programmes, IVAs or file or bankruptcy over the course of the year, which is up sharply from the estimated 104,000 in 2008.

The firm has stated that many people that have a lot of debt or have been spending frivolously on holidays and the like will not be able to cope with the financial effects of the economic downturn, and eventually will have no other option but to seek insolvency. Latest figures have already shown that there has been a sharp rise in personal insolvency numbers. In 2008 KPMG estimates that lenders had to write off around £1.1 billion in bad debt over the course of the year.

Mark Sands, KPMG’s director of personal insolvency, stated: “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.”

The firm said that in 2008 around 2500 people entered into an Individual Voluntary Arrangement with total debts of over £100,000.

Mr Sands 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.”