Insolvencies are continuing their rise with current figures showing the highest levels of Protected Trust Deeds and DAS approved payment schemes seen to date, says Scottishtrustdeed.co.uk.
The figures for the second quarter of 2011 from Accountant in Bankruptcy (AiB) show that while bankruptcies have dropped by 8% since the same period last year, Protected Trust Deeds have risen by 22% and DAS approved payment plans by a whopping 72%.
The figures now stand at a total of 5,378 personal insolvencies declared between April and June 2011, up 4% since the same time last year. 2,852 were awards of bankruptcy, 2,526 were Protected Trust Deeds and 856 were under the Debt Arrangement Scheme.
Fergus Ewing, the minister responsible for overseeing the personal insolvency and debt management arena in Scotland, said: “Personal insolvencies for this period have increased slightly while bankruptcy awards have gone down, which may be attributed to the increase in number of protected trust deeds as well as the success of the Certificate for Sequestration, introduced in November 2010 to give much needed debt relief to individuals who previously didn’t qualify.
“The notable increase in debt payment programmes approved under the Debt Arrangement Scheme was expected following AiB’s efforts to raise awareness of improvements which were made to the Scheme in July this year. With DAS offering a less severe alternative to bankruptcy and providing benefits to both parties – such as freezing of interest and charges for debtors and at least a 90 per cent return for creditors – I hope that Scots struggling with debt are encouraged to seek advice at an early stage.”
Interestingly, the numbers of bankruptcies awarded through LILA – Low Income, Low Assets – has dropped by 26% since the same time last year and now stands at 1,223. LILA was designed specifically to help those with little income and few assets declare bankruptcy at a vastly reduced cost while simultaneously freeing up court time.
A spokesperson for Trust Deed Scotland Company, Scottishtrustdeed.co.uk, said: “It’s of no surprise that the number of personal insolvencies are on the rise given the current economic conditions, but it is good to see that the number of bankruptcy awards – both through LILA and through the normal routes – has gone down.
“This is due in part to more people being aware of the benefits of Protected Trust Deeds and DAS, where before they may have felt bankruptcy was the only option open to them. In particular DAS has been enormously influential in debt management, and steps taken this year to make it more accessible to a larger number of people will hopefully lead to a further lowering of bankruptcy awards as people choose to stay the course and pay back what they owe their creditors.”
While personal insolvencies have seen an increase, so too have corporate insolvencies. There were 361 notices of insolvency or receivership by Scottish registered companies between April and June, a 46% increase since the same time last year and a 5% increase since the previous quarter.
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