Originally posted on https://www.scottishtrustdeed.co.uk/reports/personal-insolvency-in-scotland-at-a-5-year-high/

Personal insolvency in Scotland increased by more than 20% last year, with scottish trust deeds Scotland’s preferred way to escape debt. That more people are seeking help is a positive, but the overall rise in insolvency paints a worrying picture, says Scottishtrustdeed.co.uk.

• 12,788 personal insolvencies were registered in Scotland during 2017/18, up 20.6% on the previous year
• So far this year, the figures are up again, with 3,520 personal insolvencies registered in Q1 2019/20 compared with the same period last year.
• Bankruptcies are down, overtaken by scottish trust deeds which increased by 18.6% to 2,336 over the same period last year
• With financial pressures increasing, Scottishtrustdeed.co.uk, Scotland’s debt management specialists, recommend that anyone with unmanageable debt problems seeks help sooner rather than later.

Personal insolvency in Scotland continues to increase. Final figures for 2018/9 from the Accountant in Bankruptcy show that personal insolvencies increased from 10,602 in 2017/8 to 12,788 last year, an increase of 20.6%. That’s the highest figure since 2013/4 and is the third year in a row that numbers have risen.

Figures for the first quarter of the new financial year show that trend continuing, with a near 10% rise in personal insolvencies during Q1 this year compared with the same period last year.

Scottish Trust Deeds: Scotland’s preferred route out of debt

Once again, it was the Scottish protected trust deed (PTD) that showed strongest growth amongst debt management solutions, maintaining the trend of recent years. Whilst bankruptcies (sequestration in Scotland) reduced by 5% during the first quarter of this year, Debt Arrangement Schemes increased by 14% and PTDs by 18.6%. This comes on the back of a 32.8% growth in PTDs during 2018/9.

For Scottishtrustdeed.co.uk, that trust deeds are outperforming sequestration is not surprising news. “We’ve seen a pattern in recent years of bankruptcies decreasing while PTDs rise,” says a spokesperson for the debt management specialist.

“We welcome the fact that more people are discovering the advantages of trust deeds compared with sequestrations. Trust deeds may enable more people to keep their property. They can only be instigated by debtors, not creditors. And trust deeds can be a more flexible form of debt management solution.”

Nevertheless, the company believes the overall increase in insolvency is reason for concern. “Earlier this year, the Scottish government’s business secretary, Jamie Hepburn, said the rise in insolvency was a result of ‘the challenging economic times we are facing with more Scots experiencing increased financial pressures’.

We would agree with that, but Brexit, market volatility and ongoing challenges with Universal Credit mean those pressures are only likely to continue – and it’s important that our leaders understand the very real pressures Scots are facing in trying to make ends meet. We’re glad that more Scots are finding a way out of debt, but I think we would all prefer it if fewer people ended up in debt trouble in the first place.”

One simple step to support

For Scottishtrustdeed.co.uk, the single most important step a person can make when struggling with debt is to seek help fast. “Debt has a nasty habit of spiralling. Seeking help sooner rather than later doesn’t just put a solution in place. It can put a stop to interest and penalty charges. It can stop creditors hounding you. And in helping people get their lives back on track, it can make a big difference to health and mental wellbeing.”

About trust deeds

A trust deed is a formal agreement between a debtor and their creditors that can help someone struggling to manage their debt. Once protected, and in return for paying a much-reduced amount over four years, an individual can clear their debts without being chased for payment or threatened with court action.

About Scottishtrustdeed.co.uk

Scottishtrustdeed.co.uk is a financial advice company specialising in debt advice for those who are struggling with their monthly debt repayments. Established in 2009, the company’s aim is to help individuals in a black hole with their debts by negotiating with their creditors and bringing them back to financial stability.