Scots insolvencies continue to fall

THE LATEST figures from Scotland’s Insolvency Service show a deepening trend for a long-term decline in personal insolvencies.

Accountant in Bankruptcy (AiB), the body responsible for administering the process of personal bankruptcy and recording corporate insolvencies in Scotland, said the number of total personal insolvencies had dropped 11% on the same period a year ago.

Total personal insolvencies, which include bankruptcies and protected trust deeds, totalled 2,345 for the third quarter of 2015/16 up to 31 December, a 5.2% uptick on the previous three months.

The Scottish Insolvency Statistics for the third quarter of 2015/16 show a return to “relative stability” following a bedding-in period after the introduction of the Bankruptcy and Debt Advice (Scotland) Act, which amended the laws governing bankruptcy on 1 April 2015.

Personal insolvencies in Scotland have been dropping consistently since 2008/09, and the numbers fell significantly in the first quarter of 2015-16 – the first months since the new legislation came into force. Figures for the third quarter of the year show 989 bankruptcies – up 2.5% on the previous quarter, but still 37.4% lower than during the same period a year ago.

Protected trust deeds recorded went up 7.2% from the previous quarter to 1,356.

The number of new debt payment programmes approved under the Debt Arrangement Scheme (DAS) increased 13.4% to 517 after several quarters of decline.

A total of 312 DAS debt payment programmes were completed in the third quarter of 2015-16 – a 46.5% increase compared to the same quarter of 2014/15. Some 969 DAS debt payment programme cases have been completed in the first three quarters of 2015-16, which is 73 more than the whole of 2014/15.

Business minister Fergus Ewing said: “These figures indicate more people are taking action to regain control of their finances. The changes we introduced last year introduced the Scotland’s Financial Health Service website and helpline to direct people worried about their finances to trusted sources of advice and information.

“We also improved access to debt relief for the most financially vulnerable people in Scotland. “It is nevertheless clear the big picture shows a decline in the number of people having to utilise a statutory debt relief or debt management product. The numbers are significantly down on last year and we will do everything we can to ensure this long term trend continues.”

However, the number of Scottish business failures rose from 180 in the previous quarter to 254.

But the AIB says this is likely to be down to the time taken between the date a corporate insolvency is awarded or a member’s voluntary liquidation is registered and when AiB receives notice, indicating that the figures may not exactly reflect the number of corporate insolvencies awarded or member’s voluntary liquidation registered during a quarter.