The pressure on household incomes has been unrelenting over the last year, and while it would be good to think Scotland is coming out of recession, there have been several high profile events in the UK that could have improved the economy temporarily.
Edinburgh, Scotland (PRWEB) February 21, 2013
The latest statistics from the Accountant In Bankruptcy shows that personal insolvencies, which include protected trust deeds and sequestrations, has decreased substantially by 24.5% compared to the same period last year and 27.5% over the previous quarter.
The cause of the large drop in personal insolvency can be attributed in the main to a fall in sequestrations being undertaken. There were 1,859 sequestrations in the second quarter of this financial year, a drop of 44% since quarter one and 35% decrease over the same period in the previous year. The reason for the large drop is likely to be the changes in fees that came into effect in June, which doubled the cost of applying for sequestration from £100 to £200. The seems to be confirmed by the number of debtor applications, which have increased by 39% since the same quarter last year. In particular Low Income, Low Asset (LILA) debtor applications are down by a whopping 47%.
The most popular form of insolvency, Trust Deeds in Scotland have shown a much smaller decrease overall of 3.8% since quarter one and 12.7% compared to quarter two of the previous year, taking the total undertaken to 2,204.
While part of the reason could be attributed to the increase in sequestration fees, another reason is likely to be the rise in popularity of the Debt Arrangement Scheme (DAS), which totalled 1,110 approved programmes in the second quarter. The represents a rise of 30% over the same time period last year. The AiB and debt advisers have been keen to promote DAS during the year, and it is likely that the increase in programmes undertaken is a reflection of this.
In the business world, the number of Scottish businesses filing for insolvency or entering receivership is down by 24% since 2011/12 and down by 35% since the last quarter.
Bruce Cartwright, head of business recovery at PwC accountants in Scotland, said: "It is good to see some positive economic news for Scotland with a marked drop in the number of personal and corporate insolvencies. While this is a welcome back drop for our recovery out of recession, we have to be mindful that there is still pressure and distress out there for some, and as a result we may still see some casualties over the coming months."
A spokesperson for Trust Deeds Company, Scottishtrustdeed.co.uk echoes Mr Cartwright’s advice to interpret the figures with caution, adding: "The pressure on household incomes has been unrelenting over the last year, and while it would be good to think Scotland is coming out of recession, there have been several high profile events in the UK that could have improved the economy temporarily. It is too soon to say that the recession has passed and that personal and corporate insolvencies will now gradually recede. Figures for the last quarter of 2012/13, which will include the financial hangover left over from Christmas, may tell a different story."
About Scottish Trust Deed:
Scottish Trust Deed provides help and advice on all aspects of Trust Deeds. With a Trust Deed people can legally write off up to 90% of there debt and be completely debt free in 36 months.