Number of Scots in Debt Management Schemes Falls By 21.3%
February 2, 2015
The rate of insolvency among individuals in Scotland fell by as much as 21.3 per cent between the final quarter of 2013 and the last three months of 2014, according to official figures on the subject.
According to the Insolvency Service, which collects insolvency data on behalf of the government across Scotland, England and Wales, found that there were 2,633 Scots who became officially insolvent in Q4 2014. The notably reduced figure continues a downward trend in terms of overall insolvency numbers in Scotland that has been falling since 2012.
Scottish insolvency processes work differently to those elsewhere in the UK, with Trust Deeds and sequestration finding their equivalents south of the border in Individual Voluntary Arrangements (IVAs) and bankruptcy respectively. According to the Insolvency Service’s latest figures, there were a collective total of 11,621 insolvencies across both categories over the course of 2014.
In the fourth quarter of last year, there were 1,577 sequestrations in Scotland, which represents a 5.7 per cent dip compared with the same period of the year before.
In its latest report relating to insolvency data in Scotland and the UK, the Insolvency Service reflects on the impact that Low Income, Low Asset (LILA) sequestrations have had on the way people deal with unsustainable debts around the country.
“A new route into sequestration was introduced in Q2 2008. The Low Income Low Asset (LILA) route was aimed at widening access to debt relief, and resulted in a large increase in the number of sequestrations,” the Insolvency Service report explained. “Since then, sequestrations have shown a generally downwards trend since the beginning of 2008 and recent totals are now approaching those levels seen before the introduction of LILA.”
The report goes on to suggest that the decline in the number of Scots entering Protected Trust Deeds (PTDs) could be the result of greater use of Debt Arrangement Schemes (DAS) around the country. A DAS does not amount to an official form of insolvency and so the associated figures do not make it onto the Insolvency Service’s list for the quarter but their use is understood to be on the increase.
According to the official numbers, it is in the context of PTDs where the falls in insolvency rates are really being seen in Scotland. In the fourth quarter of 2014, there were 1,056 PTDs recorded, which reflects a 36.9 per cent drop on the figure for the same period of the year before.
Meanwhile, over the course of 2014, there was a 7.1 per cent fall in the number of Scottish consumers using a PTD as a means of dealing with the worst of their debt problems. Indeed, at a total of 4,877, there were fewer PTDs entered into in Scotland last year than in any 12-month period since 2001.
Your personal credit score plays an important part in securing new loans and credit, and can affect your financial life for better or worse. Lenders use the information in your credit file to determine whether you present a high risk of default, and if your credit score is low, you may find it difficult to […]
Credit unions offer a range of financial products including current accounts, savings accounts, and loans, and can be a good alternative to banks and building societies whilst also helping your cash flow. There are credit unions all around the UK, almost 100 of them operating in Scotland. They’re not always widely advertised, however, and although […]
It’s a worrying situation when you realise your outgoings exceed your income, and it can be difficult to prevent debt in this situation, but there are solid steps you can take to get back on track – you just need to act quickly. Increasing your income or reducing the money going out are essentially what […]
If you’ve lost your job, state benefits and tax credits can provide vital financial support to see you through this tough time and help you avoid taking on too much debt while you look for more work. As far as your old employment is concerned, it’s important that you check your final wage slip to […]
If you are a Scottish resident in financial difficulty, you may have entered into a Trust Deed in order to restructure debt repayments to creditors. A Trust Deed is a fixed voluntary agreement made between the debtor and creditor, with the help of a trustee. Debt is broken down into smaller, affordable instalments, typically lasting […]
A Debt Arrangement Scheme (DAS) is a government backed scheme which allows you to repay debt through contractual, monthly instalments without the threat of legal action and incurring penalties or interest. The scheme was established in 2004 for Scottish residents in debt, providing an alternative solution to sequestration, the Scottish equivalent of bankruptcy. A Debt […]