View Full Version : 40 people are declared insolvent every day

Sunday, February 4th, 2007, 09:22 PM
Well,as long as it 'boosts the economy', the government won't give a damn...
I heard that somewhere - that people getting into debt, with credit cards etc ultimately boosted the economy. I couldn't believe it, well, actually, i probably could, in this sick world...

ALMOST 14,000 Scots were declared insolvent in 2006 in the worst year on record for Britain's debt crisis.

And with 40 people a day now becoming insolvent, financial experts say the figures for this year will be even higher.

The latest government statistics show 5,430 Scots went bankrupt in 2006. A further 8,208 Scots entered into Protected Trust Deeds, a voluntary arrangement where debtors declare themselves insolvent but do not have to go through the courts. Overall the number rose 15 per cent to 13,638.

Accountants blamed a combination of rising house prices, the ease of getting credit and a growing "spending-spree culture".

The situation in Scotland reflects a UK-wide problem with more than 100,000 people in England and Wales being declared insolvent. Higher fuel costs, council taxes and real-price inflation were also blamed for the problem.

Matt Henderson, a business recovery and insolvency partner at Johnston Carmichael, said bankruptcies were set to increase. He said: "Debt problems in our society are in danger of spiralling out of control unless action is taken now to tackle the causes."

He called for improved teaching in schools on how to budget and the danger of debt.

Protected Trust Deeds (PTDs) are increasingly popular as insolvency practitioners advertise on television and in newspapers.

The agreement means the organisation or individual takes control of the debtors' income for three years and gradually pays back about 30 per cent of the debt. However, it also means the individual is credit blacklisted and any inheritance they come into at that time will go to the creditors.

Mr Henderson said it was too easy to take out credit without considering the ability to pay it back.

Rob Caven, recovery and reorganisation partner at Grant Thornton Scotland, said 40 people in Scotland were becoming insolvent every day - and the problem was about to get a lot worse.

"The vast majority of today's repossessions, which represent the last resort in a personal case, are borne of the insolvency proceedings of 2005. With the huge insolvency levels seen last year, repossessions in 2007 are heading in no other direction but up," he said.

Andrew Kennedy, the head of personal insolvency at KPMG, agreed the real figure of insolvency was probably even greater as thousands of Scots struggle to make repayments and interest rates begin to rise.

"Today's report may just be the tip of the iceberg as there are thousands more Scots who are struggling under the burden of spiralling debt."

The Bankruptcy and Diligence Bill, which is due later this year, will reduce the discharge period for bankruptcies from three years to one, making it easier to go bankrupt. However PTDs will be made more difficult by tougher regulations on companies advertising debt relief.

The Scottish Executive said the new legislation will help tackle the problem.

• CITIZENS Advice Scotland dealt with 211 million of client debt last year - up from 157 million the previous year.

The greater availability of credit and the increasing cost of living, especially at Christmas time, has been blamed for the surge.

Ian Brown, a CAS spokesman, said many of its offices were "stretched to the limits dealing with debt and money problems".

In Clackmannanshire, the Alloa branch of CAS has seen a 40 per cent increase in clients worried about debt since the beginning of this year alone and the organisation has appealed for more volunteers.