Scotland’s insolvency service has published the results for the first quarter of 2013, revealing the highest level of personal insolvencies seen to date at 5,601 – or 61 a day. This is a 15% increase compared to the first quarter of 2011.
Personal insolvencies include Sequestrations and Protected Scottish Trust Deeds, and while bankruptcies are up by 3,310, an increase of 2.3% on last year’s figures and 26% on the previous quarter, trust deeds have marginally increased by 2% to since the previous quarter and actually decreased by 3.4% since last year. Of the 2,915 insolvency awards that were applied for by debtors, 1,563 were Low Income, Low Asset (LILA).
AiB (Accountants In Bankruptcy) has suggested the rise in bankruptcies (Sequestrations) is due to changes to its fee structure, which came into effect on 1 June 2012. Included in the changes was an increase in the fee for those debtors who apply for their own bankruptcy – and a 36.1% increase by debtor application for that quarter would confirm it as the most likely reason.
Fergus Ewing, enterprise minister, said: “The rise in bankruptcies, specifically applications for bankruptcy from debtors, can partly be attributed to a rush prior to 1 June before application fees increased. I fully expect this trend not to continue into the next quarter. However, we must not be complacent and instead face up to the challenge that these difficult economic times place upon us.”
As a result of the new Certified route into bankruptcy, which came into effect from 15 November 2010, 965 debtors were awarded bankruptcy in the first quarter of 2012/13 who would not have met the eligibility criteria to apply otherwise. This is almost 25% more than the previous quarter.
It’s not only personal insolvencies that have increased – the number of debt payment programmes under the Debt Arrangement Scheme has shot up by 1,478, an increase of 130% compared to the same period last year and 56.9% compared to the last quarter.
A spokesperson for Debt Solutions Company; Scottish Trust Deeds, said: “The recent sluggish economy is starting to show up in the official statistics for insolvencies. Far from a slow steady growth in the economy, the problems in the EU have served to weaken the economy. This in turn has meant stagnation, little employment and instead of new opportunities that would help unemployed and cash-strapped debtors back on their feet, a continuation and worsening of their difficult financial situation with inevitable results. The sudden rise of DAS is a surprise, but likely due to the improvements made to the scheme and better promotion of it too consumers.”
Corporate insolvencies also experienced an increase of 22% over the same period last year, with 420 companies registered in Scotland going into receivership or becoming insolvent.
Trust Deed Example
Example Unsecured Debts
|2||Credit card 1||£6,812|
Your Monthly Repayments Would Be
a Scottish Trust Deed £748
(total contractual repayments)
a Scottish Trust Deed £295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances. For more information on our fees click here