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Debt Arrangement Scheme remains popular while bankruptcies drop
Debt Arrangement Scheme remains popular while bankruptcies drop24 October 2012
Figures released today show that Scottish personal insolvencies have fallen in the second quarter of 2012-13. The Scottish Government’s debt management tool, the Debt Arrangement Scheme (DAS), continues to be a viable option for Scots struggling with debt as numbers for the Scheme have increased by nearly 30 per cent from the same period of last year.
Official statistics from Accountant in Bankruptcy (AiB), Scotland’s Insolvency Service, show an expected decrease in personal insolvencies by 27.5 per cent from the previous quarter and by 24.5 per cent compared to the same period of the previous year. The fall in personal bankruptcies this quarter can mostly be explained by a reduced number of bankruptcies by debtor application, which have fallen to just under half of their level in the previous quarter and by 38.7 per cent when compared to the second quarter of 2011-12. There was a particularly high number of debtor application awards in the previous quarter in advance of an increase in fees charged for this form of bankruptcy.
The Debt Arrangement Scheme, a debt management tool which freezes interest and helps people struggling with debt pay back what they owe over a longer period, continues to be popular. Although the number of debt payment programmes approved under the Scheme has fallen by 24.9 per cent since the previous quarter, it is higher than in any quarter of the previous year and shows a 29.7 per cent increase on the same period of 2011-12.
Data on corporate insolvencies show that there were 274 notices of Scottish registered companies becoming insolvent or entering receivership - a decrease of 34.8 per cent compared to the previous quarter and of 24.1 per cent compared to the same period of the previous year.
Minister for Energy, Enterprise and Tourism, Fergus Ewing, who has responsibility for personal insolvency and debt management in Scotland outlined the work of the Scottish Government to support businesses and individuals:
“The drop in personal bankruptcies for this quarter is expected – there was a surge of applications last quarter for debtors applying for their own bankruptcy, prior to a necessary fee increase in June. We will continue to monitor these figures closely over the forthcoming period.
“The Scottish Government and its agencies continue to look at ways to help individuals struggling to break the cycle of debt. Through its work on bankruptcy law reform, AiB is in the process of determining how debt management and debt relief mechanisms can be further modernised to ensure that relevant and proportionate options are available. Plans for a ‘Financial Health Service’ for the people of Scotland will focus on providing rehabilitation to individuals and organisations with advice and financial education as a key focus.
“The decrease in the number of Scottish company insolvencies is encouraging, however we must not be complacent. We are focused on maintaining Scotland’s position as the most supportive environment for business in the UK. We are taking a distinct approach to growth and business support, which includes a business rates package worth over £540m a year which has reduced or removed business rates for three in five business premises across Scotland.
"Last month, Finance Secretary John Swinney outlined a budget for economic growth – including helping small and medium sized businesses create up to 10,000 opportunities through a national employer recruitment initiative. These measures build on the £485 million additional investment we have announced since last year's Spending Review to stimulate Scotland’s economy and protect businesses, front line services and jobs all over the country, in the face of Westminster cuts.”
- A full statement of Scottish insolvency statistics for the second quarter of 2012-13 is available
- Further information regarding insolvency in Scotland, including legislation, can be found via this website
- The Debt Arrangement Scheme (DAS) is administered by AiB. Debt payment programmes approved under DAS allow individuals to repay their debts in full over an extended period of time while providing protection from enforcement by their creditors and safeguarding their home as long as mortgage payments are maintained. Further information on DAS is available at the DAS Scotland website.