Personal insolvencies increase 20% in one year

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The number of people in Scotland being declared insolvent rose by more than 20% in a year, new figures indicate.

Accountant in Bankruptcy’s provisional estimates show personal insolvencies increased 20.5% from 10,602 to 12,779 between 2017/18 and 2018/19.

The increase was driven by a type of insolvency agreement called a protected trust deed, which rose 32.9% on the previous year.

The number of bankruptcies were up 5% in the same period.

Statistics for the first three months of 2019 show personal insolvencies rose 29% compared to the same period the previous year, and were up 2% on October to December 2018.

Meanwhile, corporate insolvencies also increased, up 9% from 884 in 2017/18 to 966 in 2018/19.

The number of businesses going bust rose by a third (34%) in the first quarter of 2019, compared to the final quarter of 2018, and were up 8% on the first quarter of 2018.

The figures also indicate a rise in approved debt payment programmes through the Scottish Government’s Debt Arrangement Scheme (DAS), which enables people to get their finances in order without entering insolvency.

A total of 2,544 of those were approved in 2018/19, up 226 (10%) on the previous year.

In 2018/19, £37.1 million was repaid from debtors under DAS, down slightly from the £37.6 million in 2017/18.

Business, Fair Work and Skills Minister 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.”

Business Minister Jamie Hepburn
Business Minister Jamie Hepburn urged those in financial trouble to seek help (Andrew Cowan/Scottish Parliament/PA)

He said: “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 adviser, about finances can feel like a big step, but once the subject has been broached, it becomes easier.

“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 jump in the number of corporate insolvencies in Scotland in the last quarter continues a long-standing trend, and indicates that many companies are finding market conditions tough at the moment.

“Many distressed companies, especially in the retail and restaurant sectors, will have put their heads down and tried to get in as much cash as possible over the busy festive period – leaving difficult conversations about future options to the cold light of the new year.”

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