A recent report from Accountants in Bankruptcy (AiB) has shown that personal insolvencies rose during the the first quarter of the financial year (April – June). AiB report that there were 3,208 bankruptcies and protected trust deeds during this period, a rise of 12% on the same period last year.
Protected trust deeds made up well over half of these with 1,972 approved applications. This is a massive rise of 28% on the previous year. A protected trust deed is a legally-binding arrangement whereby you can repay your debts over four years. The rise in popularity may be down to the fact that a trust deed will clear you of debts, and whilst not an easy option, it has less harsh consequences than those of bankruptcy. This is shown by the fall in bankruptcies of 7%.
The debt arrangement scheme, which allows Scottish residents to repay their debts without insolvency action, rose again with 648 applications approved.
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Richard Dennis, AiB’s chief executive said, “While the numbers of individuals entering insolvency continues to be much lower than 10 years ago, these figures clearly illustrate personal insolvencies [in Scotland] remain on an upward trend from the first quarter of 2015-16.
“With consumer borrowing now surpassing the levels seen before the 2008 crash, we are leading an ambitious programme of reform to make sure the debt solutions offered by the Scottish government remain relevant in today’s society.”