Credit, Collections & Insolvency News
The number of personal insolvencies (bankruptcies and protected trust deeds) in Scotland rose by 7% in April-June 2019 compared with the previous quarter (January-March 2019), and rose by 9% compared with the same quarter the previous year (April-June 2018) according to latest Accountant in Bankruptcy (AiB) statistics.
The figures showed that there were 3,520 personal insolvencies (bankruptcies and protected trust deeds (PTDs)) in Scotland in 2019-20 Q1, more than the 3,216 personal insolvencies in the quarter in the previous year. There were 1,184 bankruptcies awarded during this quarter, a 5.1% decrease on the same quarter in 2018-19. PTDs increased by 18.6% to 2,336 over the same period. In addition there were 738 debt payment programmes (DPPs) approved under Debt Arrangement Scheme (DAS) compared with 646 in the same quarter of 2018-19.
A total of around £9.3 million was repaid through DAS during this quarter, similar to the £9.4 million repaid in 2018-19 Q1. Final statistics show that in 2018-19 personal insolvencies in Scotland increased by 20.6% to 12,788 from 10,602 in 2017-18. Personal insolvencies rose for the third consecutive year but remain below levels seen between 2006-07 and 2013-14. The increase in personal insolvencies in 2018-19 was due to PTDs, which increased by 32.8% on the previous year.
In 2018-19, there were 2,544 DPPs approved under the DAS, 226 more than a year earlier. In 2018-19, £37.0 million was repaid from debtors under DAS compared with £37.6 million in 2017-18.
Commenting on the figures Eileen Blackburn, of R3 insolvency and restructuring trade body in Scotland, said “Personal insolvency numbers in Scotland have been generally on the rise for around four years, and this quarter-on-quarter rise is further confirmation of that trend, as well as of generally weaker financial resilience among Scots in 2019 to date.”
“Recent above-inflation wage increases will not alone have been enough to help many people in debt keep up with their repayments. It’s also quite counterintuitive that personal insolvency numbers are on the rise while Scotland enjoys very low overall levels of unemployment. However, there are still pockets of high unemployment which will require joined-up intervention to shift, while many people who technically count as ‘employed’ would be grateful for more hours, or a switch from part-time to full-time work.”
“Consumer spending is lower than this time last year; people may be choosing to rein in their outgoings in order to try and build up a financial cushion, in response to worries about their personal budgets. The increase in the Minimum Wage in April will have given many an immediate financial boost, albeit one that may not offset a higher cost of living.”
“The rise in personal insolvencies coincides with rising concerns about personal debt levels. R3 research from earlier this year found that over two fifths (44%) of adults in Scotland are worried about their current level of personal debt, notably higher than in April last year, when 35% of adults in Scotland said the same thing, while a quarter (23%) of adults in Scotland said they do not have any savings at all at the moment.”
“For people who are finding it tough to cope financially, seeking reputable advice on the best way forward would be a sensible next step. Dealing with debt issues can be lonely and can grind away at anyone’s mental defences, but there’s no need for anyone to suffer alone – and a good debt advisor will be able to signpost clients towards sources of support, as well as setting out their options. Seeking out such advice as soon as an issue rears its head is also helpful in terms of the choices that will be available, as the longer a debt problem lingers, the more intractable it can become.”