Accountant in Bankruptcy (AiB) has released official statistics reporting personal insolvencies Scotland for the second quarter (July to September 2018) of 2018-19. There were 3,067 personal insolvencies (bankruptcies and protected trust deeds (PTDs)) in Scotland in 2018-19 Q2. The number of personal insolvencies (bankruptcies and protected trust deeds) in Scotland fell by 5% in Q2 2018-19 (July-September 2018) compared with Q1 2018-19 (April-June 2018), but rose by 23% compared with Q2 2017-18 (July-September 2017).

Commenting on the Scottish Insolvency Statistics, Tim Cooper, Chair of R3 in Scotland, the insolvency and restructuring trade body said “The small fall in Scottish personal insolvencies over the last quarter is in some ways unsurprising, as the total in the April-June period was unusually high. However, the underlying trend in personal insolvencies is still an upward one, as the comparison with the same quarter in the previous year shows.”

“The recent real-terms growth in wages when measured against inflation has helped ease the pressure on many people’s budgets, but the growth in wages has hardly been spectacular, and people’s incomes have not fully recovered since the global financial crisis of ten years ago. The considerable rise in the cost of living over the last decade means that strains on personal finances are still common. There are, however, signs that the unemployment rate has bottomed out, which may cause further rises in pay, and which could reduce some of the underlying upwards pressure on insolvency numbers.

“Once again, it is worth mentioning the rise in fuel prices, which are currently at their highest point for four years, and which will be causing headaches for many Scots. Consumer debt levels are still high, and although consumer finance is still relatively easy to access, future interest rises could cause lending to be tightened, while a higher cost of servicing debt will wipe out much of the relief gained from any growth in wages. This, in turn, could lead to a reckoning for many people who have no choice but to rely on rolling over their debts, paying only the interest but not reducing the amount they owe.

“Overall, there is a feeling of uncertainty in the air, and many people will be feeling that their finances are outside their control. Our advice for anyone in this situation, and for anyone who feels that their personal financial situation isn’t giving them any room for manoeuvre, is to seek qualified, professional and expert advice, as the sooner problems are addressed, the more can be done to help.”

Commenting on the latest figures, Minister for Business, Fair Work and Skills Jamie Hepburn said “The number of individuals entering insolvency continues to be significantly lower than 10 years ago, but we cannot take the issue of unsustainable personal debt lightly. The figures indicate that heavily marketed trust deeds are contributing significantly towards the rise in total personal insolvencies.”

“Our absolute priority is to ensure that people struggling with debt receive the right advice and are offered the most appropriate solutions. That is why we will continue to consider whether the most financially vulnerable in society are made aware of the choices open to the, and if future legislative action is required. We are clear that insolvency should be an option of last resort and we will continue to consult on and review legislation to make sure the statutory debt relief and debt management products remain fit for purpose.”