Yahoo Finance Over 200 people in Scotland will go bankrupt every week in 2019
On average 230 Scots will go bankrupt every week in 2019, according to forecasts by accountancy firm French Duncan.
Last year, approximately 12,000 people in Scotland were sequestrated — the Scottish term for bankruptcy — or had to take out a protected trust deed (PTD), a formal arrangement that allows a debtor to transfer their estate to a trustee to be held as security for a loan, French Duncan estimated. This is the highest level since 2013.
A similar number or even more will face the same fate in 2019, the firm has predicted.
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Personal insolvencies have steadily risen for the past four years in Scotland despite “extremely benign and favourable interest rates”. French Duncan has cited rising utility bills, food costs, and stagnant wages as the cause of long-term accumulated debt that Scots cannot afford to repay. Any change in circumstances through job loss, divorce or health problems will cause them to quickly succumb to bankruptcy, it said.
Eileen Blackburn, head of restructuring and debt advisory at French Duncan, said: “Although employment levels are extremely high and many individuals will have the lowest mortgage interest of their lives, it is clear that for thousands of Scots there is an underlying indebtedness which they are unable to address.
“They may have acquired this debt over a period of many years but cannot do anything but pay the monthly interest. Any slight change in their circumstances and they are quickly thrown into a financially precarious position. A reduction in overtime payments or slight increases in living costs can tip these individuals over the edge.”
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She added that some Scots are turning to high-interest short-term loans to covers themselves, ultimately increasing their debts rather than resolving the issue.
According to French Duncan’s data, 7,000 insolvencies last year were protected trust deeds, which rose 21.1% last year alone.
Business insolvencies also rose by roughly a quarter (25.8%) in 2018 compared with the previous year, the firm found, with sectors such as construction, retail and casual dining accounting for 41.6% of all corporate failures.
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She added: “I would expect around 20 Scottish businesses a week to fail in 2019, which indicates difficulties in certain sectors of the Scottish market. Undoubtedly uncertainty over Brexit, increased competition and downward consumer pressures on prices are all factors in causing business failure.”
Notable casualties include the collapse of construction services company Carillion in January 2018 and high street retailer House of Fraser, which was bought by Sports Direct owner Mike Ashley out of administration in August, with many stores still having to be closed since.
