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Personal insolvencies in Scotland up by nearly 30% year-on-year

The number of Scots who are in serious financial difficulty has increased by 29.2 per cent in the last quarter of 2018-2019 (January-March) compared with the first three months of 2018, new figures show. This is despite unemployment being at a historic low and an increase in wages.

Accountant in Bankruptcy (AiB) reported personal insolvencies rose from 2,533 in the first three months of 2018 to 3,272 in the same quarter of 2019; the highest quarterly figure recorded since 2013. Some of the suggested reasons for the increase were high levels of household debt and the general economic uncertainty caused by Brexit.

There were 1,223 bankruptcies – also known as sequestration – awarded during this quarter, nine less than the previous quarter (1,232), but a 14.4 per cent rise on the same quarter of 2017-18 (1,069). Protected Trust Deeds (PTDs) was the main contributor to the overall rise in personal insolvencies, increasing nearly 40 per cent year-on-year from 1,464 to 2,049. PTDs have been on the rise since the January-March 2015.

In the first three months of 2019, there was a 22.1 per cent uplift in the number of people entering the Scottish government’s Debt Arrangement Scheme (DAS), which allows people to try to put their finances in order without going into insolvency. This figure has risen from 489 in 2017-18 to 597 in 2018-19. A total of £9.4 million was repaid through DAS during this quarter, an increase of 0.6 per cent on the £9.3 million recorded in 2017-18.

Additionally, there were 2,544 Debt Payment Programmes (DPPs) approved in 2018-19, 226 more than the previous year. A total of £37.1 million was repaid from debtors under DAS during 2018-19 compared with £37.6 million in 2017-18. In the first three months of 2019, 597 DPPs were approved under DAS, 108 more than the figure recorded in the same quarter of 2017-18 (489).

The figures mean personal insolvencies, bankruptcies and protected trust deeds (PTDs) have now risen for the third consecutive year but remain below levels seen previously between 2006-07 and 2013-14.

Corporate insolvencies in Scotland also rose by 34 per cent compared with the previous quarter (from 209 to 280), and eight per cent compared with the same quarter last year. The AiB reported 259 Scottish registered companies became insolvent or entered receivership in the first three months of 2017-18, compared with 280 in the same period of 2018-19.

Over the year, the number of corporate insolvencies increased by 9.3 per cent, from 884 in 2017-18 to 966 in 2018-19. The majority of corporate insolvencies are compulsory liquidations, an uplift of 34.2 per cent from 149 in January-March 2018 to 200 in the same period of this year. There were 137 member’s voluntary liquidations in the last quarter of 2018-19, 15 more than the previous quarter, and a 15 per cent increase (18 more) year-on-year.

Scottish government’s business secretary, Jamie Hepburn, concluded on the findings:

“In this climate it is more important than ever that people encountering financial difficulty seek early advice and the appropriate solution.

The Scottish government urges those in financial distress to obtain money advice at the earliest possibility in order to take control of their finances and ensure the right debt solution is found to suit their circumstances.”

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