Insolvency Figures Continue to Fall
Figures released by the AIB show that personal and company insolvencies in Scotland have fallen for the third successive quarter of the 2012-13 financial year. Conversely numbers for the Debt Arrangement Scheme (DAS) have increased by nearly 40 per cent from the previous year.
Official statistics from Accountant in Bankruptcy (AIB), Scotland’s Insolvency Service, show that personal insolvencies have decreased by 9.9 per cent on the previous quarter and by 28.8 per cent compared with the corresponding quarter of the previous year. Personal insolvencies totalled 3,472 in the fourth quarter of the 2012-13 financial year. The total number of personal insolvencies is the lowest since quarter four of 2007-08, which was the period before the Low Income, Low Asset (LILA) scheme was introduced.
The Debt Arrangement Scheme, the Scottish Government’s debt management tool, which allows people struggling with debt to pay back what they owe over a longer period, continues to be used as an alternative to personal insolvency. Although the number of debt payment programmes approved under the Scheme has fallen slightly, down by 8.4 per cent on the previous quarter, there was a 3.7 per cent increase on the same quarter in the previous year. This brings the total debt payment programmes approved in 2012–13 to 4,632 which is an increase of 39.6 per cent on the total approved in the previous year.
Data on corporate insolvencies shows that there were 143 notices of Scottish registered companies becoming insolvent or entering receivership in the fourth quarter of 2012-13 – a 22.7 per cent decrease on the last quarter and a 62.9 per cent decrease on the same quarter of the previous year. The full story and all statistics can be found on the
A drop in insolvencies was expected after an initial rush when the LILA scheme was introduced and will also have been affected by a recent change in the charging structure by the AIB. Other changes to the Debt Arrangement Scheme have made that easier to access and will have encouraged an increase in the use of the scheme.
While a debtor’s insolvency often causes losses for creditors, insolvency proceedings, particularly for commercial debts can be a useful tool in the recovery process.