Official figures have shown that many more Scots have been declared insolvent this year compared to last year. Personal insolvencies have risen over the previous four years, with a total of 12,788 people facing bankruptcy or protected trust deeds (PTD) in 2018/2019. This was up by thousands compared to 10,602 people going bankrupt in the previous year.
There has been an 18.6 per cent rise in PTDs, which are formal, voluntary arrangements to transfer a person’s estate to creditors. However, traditional bankruptcies have actually fallen by 5.1 per cent.
Jamie Hepburn, the Scottish Government business minister, said:
“These statistics shed further light on the issues of problem debt, the continuing economic uncertainty associated with Brexit and the unresolved problems with universal credit. I am encouraged to see that more people struggling with unsustainable debt are accessing the Debt Arrangement Scheme. This provides for controlled repayment of debt without fear of further recovery action being taken and is a good option for those who are in a position to make payments towards debt.”
The figures were published by the Accountant in Bankruptcy (AiB). The body also found that between April and June this year, about £9.3 million was repaid through debt repayment schemes, which is less than was repaid in the same quarter in the previous year.
The outlook is slightly better for Scottish businesses, with 239 Scottish companies becoming insolvent or entering into receivership in 2018/2019 compared to 245 in the previous year.
A representative from R3, the insolvency and restructuring trade body in Scotland, Eileen Blackburn, said:
“Businesses which were bracing themselves for Brexit at the end of March may have been caught out by the decision to postpone the UK’s exit from the EU until the end of October. Many companies stocked up in the first quarter of 2019 on raw materials and components, in preparation for potential disruption to normal delivery flows via EU countries in the case of a no-deal Brexit, and may have found after 29 March that they were left with a pile of stock in warehouses, with no immediate buyers.”
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