Personal insolvency at five-year high in Scotland

Insolvency numbers have risen for the third year in a row in Scotland. Photo: Getty

Personal insolvency is now at a five-year high in Scotland after increasing by more than a fifth last year.

Data from financial advisers Scottish Deed Trust shows personal insolvencies in Scotland rose from 10,602 in the 2017 to 2018 financial year, to 12,788 last year – an increase of 21%, and highest since 2013 to 2014. It also marks the third year in a row that numbers have risen.

READ MORE: 200+ people in Scotland will go bankrupt every week in 2019

And the figures show the trend continuing, with 3,520 insolvencies in this first quarter of the current financial year – another near-10% rise compared with the same period last year.

The Scottish Protected Trust Deed (PTDs) is Scots’ preferred method route out of debt, showing the strongest growth among debt management solutions, the data shows.

Bankruptcies were down in 2017 to 2018, overtaken by PTDs, which increased by 19% to 2,336 over the same period.

READ MORE: Taxpayer foots £300 million bill for insolvency payouts to former staff in 2018

Figures for the first quarter of the current financial year show this trend continuing.

While bankruptcies – or sequestration in Scotland – reduced by 5% during the first quarter of the year, debt arrangement schemes increased by 14%, and PTDs by 19%.

With financial pressures increasing, Scottish Trust Deed recommended anyone with unmanageable debt problems seeks help sooner rather than later.

READ MORE: UK company insolvencies hit five-year high in second quarter

That more people are seeking help is a positive, but the overall rise in insolvency paints a worrying picture, says Scottish Trust Deed.

A spokesperson said: “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 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.

READ MORE: Why Forever 21 must go bankrupt and disappear

“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.”