60 Scots a day will become insolvent this year. The total is the equivalent of almost 400 people going bust a week – or about 20,000 this year. That rate has more than doubled within a decade and increased nearly five-fold over the last 15 years. In addition, there are believed to be hundreds of thousands of others in Scotland mired in debt because they can only afford to meet interest payments.
Bryan Jackson, accountancy and business advisory firm PKF’s corporate recovery partner, said the economic slump meant the “very high” level of insolvencies was not expected to come down for some time. He said: “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 80,000 to 100,000 Scots will go bust in the next four to five years. 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 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. He attributed this to the higher proportion of public-sector jobs being cut, wage freezes in the public sector and possibly an over-reliance on the housing “bubble” to fund lifestyles.
Consumer Credit Counselling Service, said about 150,000 Scottish households were spending more than half their income on repaying debts. A spokeswoman said: “There is still a lot of pain out there. People’s budgets are really bursting at the seams. They do not have the disposable income to repay their debts or the ability to manage them.”
Citizens Advice Scotland urged people not to take out high-interest “pay-day loans” to avoid insolvency. Concern has increased that such lenders are cashing in on Scotland’s debt problems, with the number of clients north of the Border having soared by nearly four-fold since 2009. Head of policy Susan McPhee said: “Every such case is a personal tragedy and a family whose finances have been wrecked – with all the stress and misery that comes with that...Some pay-day lenders have rates of over 4,000 per cent. That sort of rate can be devastating for those whose incomes are low or unstable. Our evidence suggests they are being used by more and more households, and can often turn a problem debt into a crisis one.”
Bryan Jackson, accountancy and business advisory firm PKF’s corporate recovery partner, said the economic slump meant the “very high” level of insolvencies was not expected to come down for some time. He said: “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 80,000 to 100,000 Scots will go bust in the next four to five years. 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 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. He attributed this to the higher proportion of public-sector jobs being cut, wage freezes in the public sector and possibly an over-reliance on the housing “bubble” to fund lifestyles.
Consumer Credit Counselling Service, said about 150,000 Scottish households were spending more than half their income on repaying debts. A spokeswoman said: “There is still a lot of pain out there. People’s budgets are really bursting at the seams. They do not have the disposable income to repay their debts or the ability to manage them.”
Citizens Advice Scotland urged people not to take out high-interest “pay-day loans” to avoid insolvency. Concern has increased that such lenders are cashing in on Scotland’s debt problems, with the number of clients north of the Border having soared by nearly four-fold since 2009. Head of policy Susan McPhee said: “Every such case is a personal tragedy and a family whose finances have been wrecked – with all the stress and misery that comes with that...Some pay-day lenders have rates of over 4,000 per cent. That sort of rate can be devastating for those whose incomes are low or unstable. Our evidence suggests they are being used by more and more households, and can often turn a problem debt into a crisis one.”
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