Accountant in Bankruptcy (AIB) has published its latest figures which have shown a drop in numbers of sequestrations in the third quarter of 2017-18. Fewer Scots have been made bankrupt in comparison to a year ago.

In the third quarter of 2017-18 – between October and December 2017 – there were 1,089 awards of bankruptcy, a drop of 4.2% from the 1,137 in the same period for 2016-17. Bankruptcies have now fallen for the last two quarters. Personal insolvencies in Scotland have more than halved since 2008-09, and the numbers fell in early 2015-16, the first months after the introduction of new legislation on 1 April 2015.

There was evidence more people were seeking to take control of their finances and pay their debts in full without suffering the uncertainty and stress of insolvency. Approved debt payment programmes under the Scottish Government’s Debt Arrangement Scheme rose by 8.5% in the third quarter of 2017-18, up from 528 to 573.

Driven by a rise in protected trust deeds, total personal insolvencies, which include awards of bankruptcy and protected trust deeds, rose slightly by 2.1% to 2,691.

Commenting on the latest figures, Scottish Government Minister for Business, Innovation and Energy Paul Wheelhouse said: “The longer-term trend for bankruptcy is very much a downward one and it is heartening to see this reflected in these recent figures. There is absolutely no doubt in my mind the UK Government’s persistence with its failed policy of austerity is causing real hardship and strain for financially vulnerable families all across Scotland. They face even more challenges once the impact of the UK Government’s reckless determination to pursue an economically damaging Brexit becomes known.”

“However, these Accountant in Bankruptcy figures indicate the numbers of people falling into bankruptcy and signing protected trust deeds are around half of what we saw eight or nine years ago. The Scottish Government is doing what it can to mitigate the worst of these Westminster policies. The Debt Arrangement Scheme is the only statutory debt management programme in the UK and we are rightly proud of its success in providing a viable option for those seeking to pay their debts without plunging into insolvency.”


Commenting on the figures Tim Cooper, Chair of R3 in Scotland, the insolvency and restructuring trade body said “Personal insolvencies in Scotland have been on a slow, but generally upwards trajectory since around the end of 2015, and the latest rise fits this overall trend, following a slight quarter-on-quarter fall in the previous set of figures.“Looking across 2017 as a whole, there were an estimated 10,518 personal insolvencies in Scotland, which represents an increase of 8% compared with the full year 2016, when there were 9,748 altogether.”

“The final three months of 2017 did not contain any major shocks for the Scottish economy, or for indebted individuals, but the landscape remains unsettled nonetheless, continuing the patterns seen since the start of the year. For example, unemployment remains at historically low levels, but research by the Scottish Parliament Information Centre in December estimated that 274,000 people in Scotland are in jobs classed as ‘insecure’, without guaranteed hours or income, making financial planning difficult, and increasing the risk than an unexpected expense will send a family budget into a tailspin.”

“Consumer debt levels are still rising steadily, albeit at a less rapid pace than in the past, while inflation outpaced wage growth, leading to greater pressure on people’s finances. Fuel became more expensive over the second half of 2017, pushed by a rally in the price of crude oil, which will have had an impact on most households’ budgets, especially those in Scotland’s rural areas who depend on private vehicles for transport.”

“The rise in the base interest rate in November from 0.25% to 0.5%, halfway through the period covered by these latest statistics, is unlikely to have had much immediate impact, although it points towards a future tightening in the consumer credit market, while many market-watchers predict that there will be further rises in the base rate over the next couple of years. This ought to act as a warning sign for people relying on rolling over their debt from one zero-percent or low-rate offer to another: access to cheap consumer finance should not be taken for granted, and it’s better to grasp the nettle now by seeking financial advice than to be caught out at a later date, with fewer options available.”