Bankruptcies on the rise as more affluent feel the pinch

THE number of Scots being made bankrupt has jumped again, according to figures published yesterday suggesting affluent Scots are increasingly mired in serious debts.

There was a 4 per cent rise in the number of Scots going bust in the three months to the end of June, according to the Accountant in Bankruptcy (AIB).

It said there were 5,378 personal insolvencies in Scotland over the quarter, up from 5,175 in the first three months of the year but the second lowest quarterly figure for two years.

However, the figures suggest a continued shift in the profile of the average debtor in Scotland, with homeowners and those in employment accounting for a growing proportion of insolvencies.

While the number of sequestrations (the Scottish term for bankruptcies) has gradually fallen over the past 18 months, the number taking out protected trust deeds (PTDs), continues to rise.

PTDs are informal bankruptcy arrangements with fewer restrictions than sequestrations and are typically used by debtors with property and total assets over 10,000.

There was 10 per cent rise in PTDs in the last quarter, according to the AIB, and Bryan Jackson, corporate recovery partner with accountants PKF, said the increase suggested personal insolvency was hitting the more affluent in society.

"The AIB states that 75 per cent of those taking out a PTD earn more than 1,000 a month with 2.5 per cent earning more than 3,000 a month, which indicates that bankruptcy seems to be spreading among all sectors of society," said Mr Jackson.

And Roy Roxburgh, Scottish council member of R3, the recovery professionals association, warned that there was no sign of an immediate end to the current high levels of personal insolvency.

"R3 has identified the existence of an insolvency lag between the end of a recession and the peak in insolvencies and this is what we are seeing in Scotland," he said.