More than 60 Scots a day going bust
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Over 60 people in Scotland are entering insolvency every day, with well over five thousand becoming insolvent during the first three months of the 2012-13 financial year.
Figures from the Accountant in Bankruptcy (AiB), Scotland's Insolvency Service, revealed that 5,601 people were declared insolvent north of the border in the first quarter of 2012-13. This marks an increase of 14.9% on the previous quarter, and a 5.3% rise on the same period last year.
The AiB said that the steep rise could be partly explained by more seriously struggling borrowers applying for bankruptcy before higher fees were brought in back in June.
The findings certainly paint a worrying picture of Scotland's debt levels. But insolvency doesn't have to be the answer to debt problems.
If you're struggling to repay what you owe, taking action sooner rather than later could help you stop your debts getting to the point where you need to go insolvent - so you can find a different way of getting your finances back under control.
'Facing up to the challenge' of debt
Insolvency, such as a Trust Deed or bankruptcy, is designed to help people who can't afford to repay their lenders in a reasonable timeframe.
However, for people who can still afford to make smaller repayments to their unsecured debts - and get them repaid in full - the Debt Arrangement Scheme (DAS) can provide a suitable alternative. It'll still affect their credit rating, but it can help them avoid bankruptcy altogether.
The figures revealed that 1,478 Debt Payment Programmes through DAS were approved in the first quarter of 2012-13, an increase of 56.9% on the previous quarter, and up by 129.9% on the same period last year.
Fergus Ewing, Minister for Energy, Enterprise and Tourism, said that despite the sharp rise in insolvencies, he "fully expects" the trend "not to continue into the next quarter".
However, he added: "We must not be complacent and instead face up to the challenge that these difficult economic times place upon us."
So, with this in mind, what could you do to ensure your debts don't put your financial security at risk?
Staying on top of your debts
In the current climate, it can be more difficult than ever to keep on top of our finances.
With living costs rising and wages all too often remaining flat, budgeting for all our monthly costs is by no means easy for most of us.
However, there are some practical ways you can try to stay on top of your debts - and the Debt Advisory Centre Scotland could help you figure out the best way of doing this.
In any case, you should be careful not to borrow any more than you can afford. If you don't think you'll be able to repay everything you owe in a reasonable period, then you should steer clear of taking out any more credit when you want to buy something.
Think about other ways you could safely afford the cost. Do you have any savings you could use instead, or could you cut back on your outgoings for a few months and put some money into a savings pot to go towards the expense?
For any outstanding debts you have, the most important thing is that you stay on top of your minimum monthly payments. This means you should have a budget in place, to help you make sure you have enough money set aside for your monthly repayments.
If you're looking for budgeting advice, a professional debt adviser can give you some tips.
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Weather for Kirkcaldy
Thursday 20 June 2013
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