The Courier & Advertiser (Fife Edition)
Seek help before becoming a statistic
The overall number of Scots facing insolvency in the first quarter of 2019 rose 29.2% compared with the first quarter in 2018, according to analysis of the latest accountant in bankruptcy figures by accountants and business advisers French Duncan LLP.
The figures reveal that personal insolvencies rose from 2,533 in the first quarter of last year to 3,272 in the equivalent quarter this year.
The quarterly numbers for personal insolvencies in Scotland have not been this high since the fourth quarter of 2013.
The increase was highest among those taking out a Protected Trust Deed (PTD), which has risen by 39.9% year-on-year from 1,464 to 2,049. This is the highest quarterly figure for PTD’s since the third quarter of 2012.
Eileen Blackburn, head of restructuring and debt advisory at accountants French Duncan LLP, said: “The increase in the number of personal insolvencies in the first quarter of 2019 is expected, given the upward trend over the last few
years and the substantial increase last year.
“We have now experienced four years in a row of rising personal insolvencies, which is a clear sign that large numbers of the Scottish population continue to experience serious financial problems.
“With almost 33 Scots a day facing insolvency throughout 2018, it is depressing this trend is continuing.
“The issue of long-term debt continues in Scotland with many people, despite low interest rates and high levels of employment, stuck in a spiral of indebtedness. The annual number of Scots being bankrupted has increased by 37.4% since 2015.
“Of considerable concern is the number of Scots taking out a PTD, which has risen by more than 70% since 2015.
“This is usually a route out of debt used by the more affluent who have property and assets. We may be about to see an explosion in the number of middle-class debtors.
“What these first-quarter figures reveal is that substantial numbers of Scots are simply existing with their debts. They are paying interest each month, but the underlying debt remains the same.
“These people are vulnerable to any slight change in their circumstances, such as reduced hours, less overtime, job loss, an increase in their family or an end to a mortgage deal.
“All of these small, but significant, changes can have a serious impact upon the long-term indebted, tipping them over into insolvency.”
Eileen said some of this debt could even remain from the financial crash of 2008, or has simply built up over a number of years.
“It is an indication of just how deep-rooted serious debt now is within Scottish society, as the current levels of personal insolvency were, until comparatively recently, unheard of,” she said.
“Up to 2004, more than 11,000 Scots facing insolvency each year would have been unheard of. But personal insolvency has become more commonplace.
“Individuals who find themselves with long-term debt that never reduces, which is a monthly struggle to meet the interest payments, are in serious financial trouble and should seek advice.
“Nobody needs to live with this level of indebtedness and there are ways of getting out of this debt.
“Those who feel that their financial position is out of control should immediately seek help before they become an unfortunate future insolvency statistic.”