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Bankruptcies in Scotland - the worst may be yet to come

08/02/2010

The number of Scots being made bankrupt because of unmanageable debts `could yet reach a new high despite a fall in personal insolvencies` in the final quarter of 2009, scotsman.com reports.

Compared with the third three-month period of the year, the number of personal insolvencies in Scotland dropped by around 1.5% in the final three-month period of 2009.

However, as scotsman.com reports, `the situation north of the Border could deteriorate further as restricted access to credit forces more affluent Scots into debt difficulties`.

The fall in Scottish insolvencies has been put down to a 24.9% annual drop in the number of people in debt choosing the `low income, low asset` (LILA) route into bankruptcy. This route, which was introduced in April 2008, makes it easier for borrowers with little in the way of assets to declare themselves bankrupt.

Meanwhile, the number of Protected Trust Deeds (PTDs) taken out in the final quarter of the year increased by 26.7%, compared with Q4 2008. PTDs are `informal bankruptcy arrangements with fewer restrictions than sequestrations`, as scotsman.com puts it, and can help people who would not qualify for the LILA route.

Corporate recovery partner at PKF accountants, Bryan Jackson, said: "These may be people who have, in the past, used rising equity values in their homes to clear their debts as they arose but who now find that option closed.

"The result is that more Scots are finding they cannot afford to continue with their current levels of debt and are being forced into bankruptcy."

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More than 4 million fear they`ll be made redundant 16/12/2010 - According to R3`s quarterly personal debt tracker, more than 4 Consumers took on more mortgage debt in July 26/08/2010 - Consumers took on £2bn more mortgage debt than they repaid Debts called in by parents 26/08/2010 - According to research, `the bank of Mum and Dad` is Teenagers `scared of debt` 19/08/2010 - Nearly two thirds of teenagers are `scared` of debt, according