1,000 face court every day as debt crisis spirals

Councils are taking more steps to recover money owed. Picture: David Moir

Councils are taking more steps to recover money owed. Picture: David Moir

10
Have your say

THE number of people being threatened with court action after falling into debt has risen dramatically, according to figures from Scotland’s bankruptcy body.

A report by Accountancy in Bankruptcy, a Scottish Government agency, shows nearly 380,000 debtors were the subject of such legal moves in 2013-14 – up 20 per cent in a year and the equivalent of more than 1,000 every day.

The number of cases, the majority of which relate to the non-payment of council tax, rose by 49 per cent in Lothian and Borders and 33 per cent in Grampian, Highlands and Islands.

The rising number of actions is being put down to increasing use of powers handed to local authorities to make it easier for them to recover debts with minimal legal costs.

However, experts believe the figures are further proof that parts of the economy are still struggling to recover from the recession. The annual diligence statistics – the term used for the various processes of civil enforcement in Scottish law – show the number of “charges” for payment which were served in 2013-14 rose by a fifth from 314,862 to 376,755.

Some 80 per cent were for council tax debt, but the number of cases for other types of debt, including personal loans and credit cards, rose by 44 per cent.

CONNECT WITH THE SCOTSMAN

Subscribe to our daily newsletter (requires registration) and get the latest news, sport and business headlines delivered to your inbox every morning

• You can also follow us on Facebook, Twitter and Google +

In Lothian and Borders, the number of charges, essentially a formal demand for money owed, rose from 45,029 to 66,886. In Grampian, Highlands & Islands, the figure rose 33 per cent from 42,770 to 56,883.

Cases are up 21 per cent in Tayside, Central and Fife, and by 15 per cent in Glasgow and Strathkelvin.

Leonie Donald, a partner at law firm Aberdein Considine, said: “There has been a large rise in the number of people being taken to court over debts this year, mainly because councils have been more proactive in recovering the money they are due.

“The figures are worrying in that they highlight the difficulties that are being encountered by individuals in paying their council tax, which is an increasing concern for all those involved. It is indicative of an economy still struggling to recover. It is also an indicator that councils are taking a harder line in recovering arrears.”

The figures show a 20 per cent increase in the use of summary warrants by councils over the year.

The summary warrant procedure is a shortened court process available to certain public creditors to pursue the amounts they are owed and is used, in the main, by local authorities.

It involves an application being made to court by the council in respect of debts due by a number of debtors and for which no hearing is held.

Miss Donald said the introduction of the warrants had been “bad news” for people in debt, making it easier for councils to recover money owed by freezing funds in bank accounts or through bankruptcy.

Earlier this year, Citizens Advice said the number of people seeking help for council tax ­arrears across the UK had “rocketed” to become the most common type of debt problem.

SCOTSMAN TABLET AND IPHONE APPS

• Download your free 30-day trial for our iPad, Android and Kindle apps

Keep up to date with all aspects of Scottish life with The Scotsman iPhone app, completely free to download and use

Back to the top of the page