Scotland Could be “Stocking Up” Its Personal Debt Problems

October 31, 2017

Consumers across Scotland could be “stocking up” debt problems and heading for serious difficulties in the coming months or years.

That’s according to Eileen Blackburn, who is chair of the technical committee for the insolvency trade body R3 in Scotland.

The insolvency expert has said that while official figures show a decline in the number of entries into bankruptcy or a protected trust deeds in Scotland during the second quarter of this year, there are signs of strain on the personal finances on a great many people across the country.

Ms Blackburn has noted that while employment levels are high in Scotland and the UK as a whole, wages have generally not been keeping pace with rates of inflation.

This issue is believed to be particularly problematic for people in Scotland, where R3’s research suggests that 24 per cent of adults struggle to reach payday every month specifically because their pay levels have been frozen.

Across the UK as a whole, only 16 per cent of people cite pay freezes as a reason why they find it tough to cope financially between paydays.

For a sizable proportion of consumers across Scotland and the UK, personal financial pressures have led to an increased reliance on credit, which can eventually lead to a need for formal debt solutions and insolvency.

The number of people in Scotland who entered insolvency in the second quarter of this year was 12.9 per cent lower than the figure for the first quarter but 0.5 per cent higher than the same number for Q2 2016.

In England and Wales, applications for Individual Voluntary Arrangements (IVAs), a form of personal insolvency, reached a record high during the third quarter of this year.

“The relative availability of consumer credit could be helping keep insolvency numbers lower than they might be, although it could be stocking up problems for later on,” said Ms Blackburn from R3, in reference specifically to the situation among Scots.

“It isn’t clear how long people will be able to plug holes in their finances with easily available credit,” she added.

If you live anywhere in Scotland and need advice about dealing with your personal debts then Scotland Debt Solutions can help. Call any of our offices to arrange a free and confidential consultation.

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