Accountant in Bankruptcy figures show total personal insolvencies on the rise

The latest statistics from Accountant in Bankruptcy (AiB) show awards of bankruptcy have remained largely static compared to the same period a year ago.

The 1,150 bankruptcy awards for the second quarter of 2018-19, covering the period from 1 July to 30 September 2018, are almost identical to the 1,146 awarded in the same quarter for 2017-18, showing a mere 0.3% rise.

However, total personal insolvencies, which include both bankruptcies and protected trust deeds (PTDs), rose by 23% from 2,493 in the second quarter of 2017-18 to 3,067, driven by an increase in PTDs. There were 3,067 PTDs in the second quarter of 2018-19, which was nevertheless down from the 3,218 recorded in the first quarter of the year.

The Scottish Government’s pioneering Debt Arrangement Scheme (DAS), which allows people to take control of their finances and repay their debts without facing insolvency or further action being taken against them, was also largely static, with 638 debt payment programmes awarded under DAS for the quarter, compared to 662 in the same quarter for 2017-18.

A total of £9.2 million was repaid through the scheme in the quarter, narrowly down from the £9.4 million in the same quarter a year ago.

Commenting on the latest figures, Minister for Business, Fair Work and Skills Jamie Hepburn said: “The number of individuals entering insolvency continues to be significantly lower than 10 years ago, but we cannot take the issue of unsustainable personal debt lightly.

“The figures indicate that heavily marketed trust deeds are contributing significantly towards the rise in total personal insolvencies.
“Our absolute priority is to ensure that people struggling with debt receive the right advice and are offered the most appropriate solutions. That is why we will continue to consider whether the most financially vulnerable in society are made aware of the choices open to them, and if future legislative action is required.

“We are clear that insolvency should be an option of last resort and we will continue to consult on and review legislation to make sure the statutory debt relief and debt management products remain fit for purpose.”

The number of Scottish corporate insolvencies rose very slightly during the quarter from the same period a year ago. There were 232 total corporate insolvencies during the quarter, up just eight from the 224 recorded in the second quarter of 2017-18. This number was composed of 128 compulsory liquidations and 104 creditors’ voluntary liquidations. There were no receiverships recorded during the quarter.
Nevertheless, the 232 recorded during the second quarter of 2018-19 is down on the 245 reported in the first quarter of the year.