Accountant in Bankruptcy’s (AiB) has published its latest scottish personal insolvency provisional figures for the financial year 2018-19 which show there were 4,862 awards of bankruptcy compared to 4,644 during 2017-18. The number of personal insolvencies (bankruptcies and protected trust deeds) in Scotland rose by 29% in January-March 2019 compared with the same quarter the previous year (January-March 2018), and rose by 2% compared with the previous quarter (October-December 2018).
The latest statistics also show an increase in approved debt payment programmes through the Debt Arrangement Scheme (DAS), the Scottish Government’s pioneering initiative allowing individuals to get back on track without entering insolvency.
Figures showed an increase of 9.7% approved DAS debt payment programmes with 2,544 awarded in 2018-19 compared to 2,318 last year.
DAS allows those in the scheme the opportunity to repay their debts and get back on track financially without fear of further action from creditors and relief from additional interest and charges on their debts.
The number of DAS debt payment programmes completed in 2018-19 was 1,687 which was a similar number to the 1,681 completed last year.
A total of £37.1 million was repaid through the scheme last year down slightly on the £37.6 million paid back in 2017-18.
Commenting on the latest figures, Minister for Business, Fair Work and Skills Jamie Hepburn said “These figures highlight the challenging economic times we are facing with more Scots experiencing increased financial pressures. The ongoing uncertainty around EU exit, alongside the challenges of the roll out of Universal Credit, bear much of the blame.”
“In this climate, it is more important than ever that people encountering financial difficulty seek early advice and the appropriate solution. It is welcome to see an increase in the number of Scots accessing the Scottish Debt Arrangement Scheme which helps them to pay back their debts. Recent reforms to the scheme will also allow more individuals in Scotland to benefit from this initiative going forward.”
“The Scottish Government urges those in financial distress to obtain money advice at the earliest possibility in order to take control of their finances and ensure the right debt solution is found to suit their circumstances.”
Commenting on the figures, Duncan Swift, Vice President of R3, the insolvency and restructuring trade body said “The quarter-on-quarter rise in the number of personal insolvencies in Scotland is not unexpected, as personal insolvency numbers have been moving upwards since 2015. The comparison with the same quarter last year is especially stark.”
“Unemployment rates in Scotland recently hit yet another record low, and average pay is rising above inflation in many sectors, but it might take a while for a pay boost to filter through into insolvency numbers. The recent recovery in the price of fuel will be adding pressure to people’s outgoings, too.”
“A recent real wage rise will not immediately undo the persistent build-up of personal debt we’ve seen over the last few years. In the UK, household debt stood at 133% of household disposable income in December 2018, while the average number of months offered on zero-per cent interest rate credit card deals is creeping downwards, which could spell trouble for those people who are using such offers to stabilise their finances without accruing extra charges.”
“The message we want to get out to people who are in financial trouble is that opening up about their problems is vital. Talking to someone, especially a professional advisor, about finances can feel like a big step, but once the subject has been broached, it becomes easier. A qualified professional will be able to set out the options available and to signpost to other sources of help and advice. Doing nothing will just exacerbate the issue, while the earlier that proper support is sought, the more can usually be done to relieve the situation.”