Scottish personal insolvencies increase 13%

28th April 2022

Latest figures from Accountant in Bankruptcy have shown that overall, personal insolvency numbers (bankruptcies and protected trust deeds) in Scotland for Quarter 4 2021-2022 were 13% higher compared with Q4 2020-2021, at 1,894 (2021-2022) against 1,677 (2020-2021).

A total of 551 bankruptcies were awarded during this quarter – a 2.1% decrease on the same quarter in 2020-21.  PTDs increased by 20.6% to 1,343 over the same period.

In the fourth quarter of 2021-22, a total of 500 bankruptcy awards were made following applications submitted to AiB, all through the revised fee structure. Of this total, 364 (72.8%) applicants were not required to pay any fee at all.

There were 727 applications for moratoria granted in 2021-22 Q4.  This is 50 (6.4%) less than the figure of 777 granted in the same quarter in 2020-21.

There were 1,040 debt payment programmes (DPPs) under the Debt Arrangement Scheme (DAS) approved in 2021-22 Q4, compared with 1,044 approved in the same quarter of 2020-21, a decrease of 0.4%.

A total of 461 approved DPPs under the DAS were completed in 2021-22 Q4 – a 1.8% increase on the same quarter in 2020-21.

There were 460 DPPs revoked in 2021-22 Q4.  This is 264 more than the figure of 196 revoked in the same quarter of 2020-21.

In 2021-22 Q4, around £11.1 million was repaid from debtors under DAS compared with the £10.1 million repaid in 2020-21 Q4, an increase of 9.8%.

Richard Bathgate, Chair of insolvency and restructuring trade body R3 in Scotland and Restructuring Partner at Johnston Carmichael, said “It has not been an easy period for individuals. Total personal insolvencies increased by 2% in the financial year 2021-22 compared to 2020-21 (7,594 compared to 7,765) but more recently this trend has accelerated with an increase in personal insolvencies of 12.9% in Q4 2021-22 compared to Q4 2020-21.”

“A 12.9% increase in personal insolvencies in Q4 2021-22 compared to Q4 2020-21 reveals a small decline in bankruptcies in that period (a decline of 2%) but a 21% increase in the number of Protected Trust Deeds. This likely reflects the emergency legislation put in place during the pandemic, which increased certain debt thresholds for bankruptcies which made entry to that process more difficult.”

“It’s been an arduous two years for many people and their personal finances but we are now emerging from that period. However, while the pandemic was an opportunity for some to save money, others have had no choice but to borrow to make ends meet.”

“At the same time, the increased cost of living is something we are already feeling the impact of, and unfortunately, it’s showing no sign of slowing down.”

“Unemployment levels have fallen slightly in the last quarter, but an increase in the cost of living across the board and wages struggling to keep up with inflation has meant money worries are prevalent for people in Scotland.”

“Rising energy, food and fuel prices are key concerns for Scottish consumers. In particular, higher rates of inflation for essential products are problematic for lower income households because the extra costs can’t be avoided. With budgets already stretched, we may see more and more people turning to credit options, even just to cover their priority bills.”