Insolvency rates drop by 50% as DAS applications continue to increase
September 2, 2013
Insolvency figures in Scotland have witnessed a ‘significant slowdown’ according to two separate reports released last month.
Statistics from Scotland’s insolvency service, Accountant in Bankruptcy (AiB), revealed that the total number of personal insolvencies fell 28.6% year on year, despite a slight increase of 14.7% on the previous quarter. Insolvency rates have fallen steadily since the dramatic rise 2008/2009, which was caused by new LILA legislation, allowing those with low incomes and low assets to declare bankruptcy. The more recent decrease in insolvencies shows that the situation is now almost completely reversed.
The positive nature of these personal insolvency figures has been confirmed by similar statistics on corporate figures, released by accountancy firm KPMG. These figures revealed a reduction in corporate insolvencies from 353 to 159 in the first quarter of 2013, before rising to 193 in the following quarter. Despite a rise in the short term, the longer picture suggests a 50% drop in corporate insolvencies in the past year.
Blair Nimmo, head of restructuring for KPMG in Scotland, told the Scotsman: “We are starting to see a much more positive trend emerge with the business failure rate in Scotland clearly starting to slow.” He suggested that increased optimism could due to the a recent upturn, though he warned that the recovery ‘remains fragile’.
The AiB report also showed an increase in the number of Debt Arrangement Scheme (DAS) applications. Whilst the number of applications for debt repayment programmes actually fell by nearly 19% year on year, the number of DAS approved applications rose by 22.8% compared with the previous quarter, suggesting more people are turning to the DAS to avoid filing for bankruptcy.
Though industry experts have claimed that an influx of payday lenders and higher LILA fees could simply be masking a problem that could return at a later date, there is widespread confidence that the worst is over. Personal insolvency levels may be falling, but people still require help to manage their debts. If you’re worried about bankruptcy and would like more information on the Debt Arrangement Scheme, why not call Scotland Debt Solutions? Combined with expert knowledge, our skilled advisers will consider the available options based on your individual situation, enabling them to provide you with the most suitable option to relieve your debt worries.
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