Credit, Collections & Insolvency News
Lates figures from Accountant in Bankruptcy (AiB) have indicated that personal insolvency numbers in Scotland rose by nearly 2.9%, to a total of 2,098.
The personal insolvency numbers in Scotland decreased by 40.5% when compared to pre-pandemic levels in 2019.
The number of personal insolvencies (bankruptcies and protected trust deeds) in Scotland for Q1 2023-2024 increased by 9.5% compared to the previous quarter’s total of 1,916 (January-March 2023). There were 2,098 personal insolvencies (bankruptcies and protected trust deeds (PTDs) in Scotland in 2023-24 Q1, 60 (2.9%) more than in the same quarter in the previous financial year (2022-23 Q1).
A total of 689 bankruptcies were awarded during this quarter – an increase of 17.4% when compared to the same quarter in 2022-23. PTDs decreased by 2.9% to 1,409 over the same period.
In the first quarter of 2023-24, a total of 550 bankruptcy awards were made following applications submitted to AiB, all through the revised fee structure. Of this total, 517 (94.0%) applicants were not required to pay any fee at all.
There were 776 applications for moratoria granted in 2023-24 Q1. This is 54 (7.5%) more than the figure of 722 granted in the same quarter in 2022-23.
There were 1,328 debt payment programmes (DPPs) under the Debt Arrangement Scheme (DAS) approved in 2023-24 Q1, an increase of 12.4% compared with the same quarter of 2022-23 where 1,182 DPPs were approved.
A total of 438 DPPs under the DAS were completed in 2023-24 Q1 – a 13.6% decrease on the same quarter in 2022-23.
There were 348 DPPs revoked in 2023-24 Q1. This is 119 fewer than the figure of 467 revoked in the same quarter of 2022-23, a decrease of 25.5%.
Tim Cooper, Vice President of insolvency and restructuring trade body R3 and Partner at Addleshaw Goddard, said “The quarterly increase has been driven by a rise in both protected trust deeds and bankruptcies. The year-on-year increase has been driven by a rise in bankruptcies, which have reached their highest level since Q2 2020-2021.”
“The decrease in personal insolvencies when compared to pre-pandemic levels should be treated with some caution. This could in part be attributed to a bottleneck effect caused by a high volume of cases outstripping the availability of support. This backlog may be temporarily suppressing the numbers.”
“Times are tough for personal finances in Scotland. Rising rent payments are a huge concern at the moment, with tenants in Glasgow and Edinburgh now using over a third of their wages just to pay for housing. For Edinburgh particularly (as reported by BBC Scotland this morning), the position for renters is made more difficult by a decreasing availability of homes to rent as landlords appear to be putting more properties on the market for sale as interest and other costs escalate, only leading to further pressures on rising rents. Homeowners with high loan-to-income ratios are also facing challenges as interest rates go up and their mortgage payments become even more expensive.”
“On top of that, the cost of food, fuel and energy are still really high, adding further strain to already tight budgets. This burden is even more pronounced for people in rural areas, as transport costs have contributed to even higher prices for essential items like food and fuel compared to urban areas.”
“With wages struggling to keep up with inflation, low-income households are being hit hard by the increased cost of living. Most of their wages are already going towards essential expenses, so with prices going up there’s just nothing left at the end of the month, and some are even resorting to credit cards and loans to bridge the gap.”