By Stefan Morkis

THOUSANDS OF Scots will suffer an extreme financial hangover this month after over-extending themselves during the festive period.

As many as 4000 Scots are likely to declare themselves bankrupt during the first three months of 2007, with 10,000 being forced into declaring themselves insolvent across the UK as a whole.

Meanwhile, the Clydesdale Bank has said that 51% of Scots find January a financial struggle and that around 83,000 desperate parents will be forced to raid their children’s piggy banks to make it through the month.

Last year, nearly 110,000 fell into insolvency in the UK, the first time the annual figure topped the 100,000 mark.

Rob Caven, recovery and re-organisation partner at Grant Thornton Scotland, said, “Last year, in the first few months after Christmas, when most bills started hitting the doormat, we witnessed the highest ever number of people going into personal insolvency.

“This year things could be even worse. Since last Christmas interest rate rises and sky-high utility bills have contributed to push more people into financial trouble.”

He added that predictions of less money being spent on Christmas in 2006 than 2005 had been wrong and that people were still putting themselves into financial difficulties so they can fund their festive celebrations.

“UK retail spend in 2006 was still higher than in 2005,” he said.

“Reports of last-minute Christmas shopping sprees clocking hundreds of millions of pounds in retailers’ tills and further stretching many already financially stretched consumers only adds to the problem.

“Many people will have funded their Christmas shopping on their credit cards this year.

“For most a little overspend is unlikely to result in personal insolvency, but for those who are already financially overstretched, spending that little bit more over the festivities can represent the last straw that breaks the camel’s back, plunging individuals in an already precarious financial position further into debt and quite possible towards a trust deed or sequestration,” he continued.

Mr Caven added that many people had credit and store card debts of up to £60,000 on top of their mortgages.

“Whilst this may sound like a warning call to stay away from the high street during the January sales, the fact remains we regularly see people, especially over Christmas and with the start of the sales, add to their existing problems in quite a substantial way,” he said.

The Clydesdale Bank yesterday said many parents will have to borrow from their children to get through January.

On average, Scottish children received £191.50 as financial gifts at Christmas—and one in 10 parents tap into that to cover costs during January.

Steve Reid, Clydesdale Bank’s director of retail banks, said, “January is possibly the hardest month of the year financially for most Scots.

“Many have to make their December salary last through Christmas until the end of January.

“Raiding the children’s money box must surely be the last resort, though, especially if the parents struggle, despite their best intentions, to pay back the full amount.”