2 January 2013: Almost 400 Scots per week will be made bankrupt in 2013 according to leading accountants and business advisers PKF.

The firm estimates that around 20,000 Scots were sequestrated (the Scottish term for bankruptcy) or took out a Protected Trust Deed (PTD) during 2012 and that a similar figure will go bust in the next 12 months.

Bryan Jackson, corporate recovery partner with PKF, explains: “There was a widespread assumption that the economy would start to show signs of recovery in 2012. However, it is clear from the Chancellor’s Autumn Statement, as well as other statistical and anecdotal evidence, that sustained economic growth remains elusive. The result is that personal insolvencies, whilst stabilising, remain at a very high rate in historic terms.

“Cuts in public sector employment coupled with rising utility bills, higher food costs, and frozen wage levels means that many individuals are borrowing simply to live. Often they are borrowing from high interest sources such as payday lenders, which runs the risk of falling into overwhelming indebtedness within a short period. Tens of thousands of Scots are just about managing to keep their heads above water and are therefore extremely vulnerable to any change in their circumstances.

“Personal insolvencies appear to be steady at around 20,000 per year. While this number is lower than the peak achieved in 2009, when 23,541 Scots were made bankrupt, it is, by any standards, a very high figure indeed. In 2004 there were 9,321 Scottish personal bankruptcies and in 1998 there were just 4,465. The reality is that 400 Scots face financial Armageddon each week.”

Bryan continued: “Given that personal insolvencies are at the extreme end of financial distress, it should be noted that there will be hundreds of thousands of Scots simply treading water and meeting interest rate payments, but with little hope of repaying their debts in the near future.

“With no improvement in the economy, employment insecurity rife, and rising living costs, there is little sign of this level of personal insolvency reducing over the next three to four years. This means that another eighty to one hundred thousand Scots will go bust in the next four to five years.”

Bryan concluded: “Scotland is still some considerable time away from recovering from the recession. We have a personal insolvency rate which continues to be almost twice that of the rest of the UK, and a static economy that is unlikely to drive forward growth in the next year or so. With an enormous dependence on the public sector for employment it is unfortunate that Scotland looks likely to have a less than happy New Year in 2013.”
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