Thousands more Scots facing bankruptcy

Thousands more Scots have been declared insolvent over the past year, official figures show.
Thousands more Scots have been declared bankrupt. Picture: PAThousands more Scots have been declared bankrupt. Picture: PA
Thousands more Scots have been declared bankrupt. Picture: PA

A total of 12,788 people faced bankruptcy or protected trust deeds (PTD) in 2018/19. This was up from 10,602 the year before. The rise has been put down to problems with the switch to Universal Credit and economic uncertainty.

Personal insolvencies have now risen for four consecutive years, driven by an 18.6 per cent rise in PTDs – a formal, voluntary agreement to transfer a person’s estate to creditors. More traditional bankruptcies fell by 5.1 per cent.

Hide Ad
Hide Ad

Scottish Government business minister Jamie Hepburn 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 from Accountant in Bankruptcy (AiB) also found about £9.3 million was repaid through debt repayment schemes between April and June this year. Compared with the same quarter in 2018, less money was paid back.

Scottish-registered companies becoming insolvent or entering receivership fell in the first quarter of 2019/20, with 239 companies becoming insolvent compared with 245 in 2018/19. AiB, which supervises all personal insolvencies, said there were also 137 members’ voluntary liquidations, down from 141 in the previous year’s first quarter.

Eileen Blackburn, from R3, the insolvency and restructuring trade body in Scotland, said: “In general, it’s fair to say that economic sentiment in Scotland is mixed.

“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.”

Commenting on the increasing personal insolvencies, Ms Blackburn said: “Personal insolvency numbers in Scotland have been generally on the rise for around four years and this quarter-on-quarter rise is further confirmation of that trend, as well as of generally weaker financial resilience among Scots in 2019 to date.

“Recent above-inflation wage increases will not alone have been enough to help many people in debt keep up with their repayments.

“It’s also quite counter-intuitive that personal insolvency numbers are on the rise while Scotland enjoys very low overall levels of unemployment.”