What Is Causing Scotland's Soaring Levels Of Bankruptcy?

In the United Kingdom, outside of Scotland, IVAs last around five years

. The Scottish trust deed takes only 3. Sequestration in Scotland requires a 100 application charge; in other parts of the UK you'll need to come up with 700 to register as bankrupt. The new Certificate for Sequestration in Scotland has unblocked the pathway to sequestration for many Scots that were previously trapped in debt. In contrast to Westminster, the Scottish parliament have developed and put in place a very impressive framework of debt solutions to help the citizens of the country.

This may be the case but in the United Kingdom, insolvency levels are stabilising and even declining, simultaneously, Scotland is reaching record amounts of protected trust deeds. In fact, the country is now experiencing the second highest trust deed level ever. If Scotland's debt plan is so great, why is this taking place? Is it the responsibility of the Scottish government, or of the British government overall? As opposed to spending money on creating an easier path out of debt, would it not be preferable to invest in stopping debt from coming about in the first instance?

Saying that the Scottish government has got its priorities wrong in relation to its attitude to debt management may be unfair. Just because it is easier to sort out a debt solution doesn't mean that the debt situation will increase. Actually, in terms of average debt, Scotland has just 8399 per head. Lower than much of the UK.

Unemployment is regularly to blame for debt difficulties. Yet the numbers don't appear to back this up in Scotland. For instance:

-There is very little difference between UK unemployment statistics and those for Scotland

-The United Kingdom in general and Scotland alone have very similar hourly pay rates

-In Scotland mortgage costs and house prices are much lower than in the UK, ruling this out as a reason

So why are protected trust deed and debt arrangement scheme numbers rising? It would appear the economic circumstances in Scotland, for which government are also responsible, is not unusually geared up to push Scottish citizens into debt in comparison to other parts of the UK. Who, or what, is creating the issue?

Many thousands of residents in the rest of the UK are believed to be in debt management plans for which no decent stats are reported. Would these debtors have utilised a protected trust deed that takes a 3 year term when a 5 year IVA just felt too long? Have people north of the border been helped to proceed with sequestration due to the fact that a 100 fee is possible where a 700 cost cannot be saved? Are debtors in Scotland opting for the (measured and reported) debt arrangement scheme instead of an 'English' DMP which has few of the positives of the Scottish DAS?

Perhaps it is feasible that the superior scheme of debt solutions in Scotland simply means a higher number of debtors feel able to take the steps needed to deal with their debts.

by: Charlie Maine

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