Scots Heading For Insolvency Crisis Says Debt Solutions Company Scottish Trust Deed

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A 15 percent rise in personal insolvency cases since 2011 reflects a sluggish economy and has experts searching for answers.

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The Accountant in Bankruptcy, which oversees the administration of sequestrations in Scotland, reports a substantial rise in personal insolvency cases this year. First quarter figures indicate over 60 individuals fall into insolvency each day, well over rates for the same time period in 2011. Enterprise minister Fergus Ewing attributes the increase for early 2012 to a rush to beat administrative changes made in June, but the experts at Scottish Trust Deed cite a sluggish economy and growing personal finance crises.

June 2012 saw an increase in application fees for personal insolvency filings like sequestrations or Scottish Trust Deeds. Debtors filing for sequestration after June 1, 2012 paid higher fees as dictated by the AiB. In the two quarters prior to the fee increase, bankruptcy cases saw a striking 36 percent jump, lending credibility to Ewing's statement about the link between 2012 increases and fee changes. However, the integration of a new route to personal insolvency may also play a role. Since the creation of the certified route in November of 2010, over 900 individuals claimed bankruptcy that would not have qualified under previous criteria.

In addition to the increase in sequestrations and Trust Deed issues, there was an increase in Debt Arrangement Scheme use. In these cases, individuals choose not to declare complete insolvency. Instead, they participate in a program to repay debt over an extended period of time or under terms that are more favorable. Activity in this area has seen a year over year increase of 130 percent and shows trending for strong growth through the year. Although payment of debt in this manner may be preferable to some over insolvency, the large number of people forced into these positions makes it clear that individuals are struggling economically. More than half of all insolvency cases filed with the AiB over the past year was the result of low income situations, possibly a result of increasing unemployment.

A Scottish Trust Deeds spokesperson points to issues with the EU, economic stagnation and low employment numbers as some issues that are pushing debtors into increasingly difficult financial situations. News from the corporate world seems to back this statement, as the number of insolvent companies is also on the rise. The number of Scottish companies going into receivership or filing for bankruptcy increased 22 percent since 2011.

As more people enter into insolvency situations that preclude them from opening new lines of credit, there may be a residual impact to the economy. Whether or not the staggering increase in insolvency cases is related to fee changes, it is sure to have an ongoing financial impact.

About Scottish Trust Deed

Scottish Trust Deed is the country's first choice for trust deeds. The company offers individuals with personalized repayment plans through certified trust deeds. Most individuals who go through the process are debt free within 36 months without losing their home or paying large fees.

For more information, visit

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David Baddeley
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