The most recent data released by the Accountant in Bankruptcy (AIB) show that personal insolvencies in Scotland have reduced for the quarter to September 2013. The figures highlighted that just over 3,400 people were declared insolvent in the three month period which was down by fourteen percent against the previous three months.
The good news is that this is the third successive period showing a reduction in the insolvency figures which includes bankruptcy and whilst there are many factors that can affect this it is certainly a positive sign on what is seen as an end of the line solution for those with serious debt problems.
New legislation should help those considering bankruptcy
In addition to the improved figures there is new legislation due at the end of this year which is designed to help people with serious debt problems get better access to help and advice. The new legislation is also expected to ensure that people who can afford to pay their debts are encouraged to do so. It is envisaged that these two measures taken together should have the effect of further reducing the number of bankruptcies each year.
It would seem that there is a move away from making it easier for the debtor to declare bankruptcy and being so readily able to write off outstanding debt towards a situation where there is a better balance that shows more consideration for the interests of the creditor and what they are owed.
Increase in the number of debt management plans
Whilst bankruptcies and personal insolvencies have shown a welcome decrease in numbers there has been a significant increase in the numbers of Scots using formal debt management schemes as a debt solution. The Debt Arrangement Scheme DAS which is the government backed scheme continues to show increases in uptake and is now seen as an effective alternative to bankruptcy.
The figures highlighted that the debt arrangement scheme showed a four hundred percent increase over the previous year’s quarterly period.
Bankruptcy and debt advice
Bankruptcy is not a process that many people are familiar with and it is therefore important that anyone considering it as a debt solution should take professional debt advice to ensure they are fully aware of the facts. The forthcoming changes in legislation make this even more pertinent and the value of independent advice on bankruptcy should not be underestimated.
Bankruptcy has serious implications for people in terms of financial restrictions, the possibility of losing their home and future credit problems. There are also the issues associated with particular jobs that forbid bankrupts and the restrictions for example on being a company director.
The process of bankruptcy is there to help people by providing a formal and legal route to resolve serious debt problems but it has its downsides and these must be considered in association with the particular circumstances of each case and the personal circumstances of the individual concerned.
Information on bankruptcy can be found on the website of the Scottish Courts.