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Bust Scotland

About 1,000 companies will go bust and 12,000 Scots will be made bankrupt in the coming year, a report Business advisers BDO has predicted. Cooling consumer demand, geopolitical and financial uncertainty and potential interest rate rises were cited as causes for concern.
Bryan Jackson, business restructuring partner with BDO, said: "For many companies and individuals there is the prospect of another year of standing still as profits remain flat and incomes are static. The slightest change in any circumstances could have serious consequences… it is of concern that even six years after the start of the recession there are still so many firms going bust.”

Bankrupt Scots

Twenty Scottish businesses are forecast to go bust each week this year, with 40 Scots being declared bankrupt each day as the nation continues to struggle under a mountain of historic debt.

Just under 15,000 Scots were sequestrated – the Scottish term for bankruptcy – or took out a protected trust deed (PTD) last year and a similar figure will go bust by the end of this year, BDO warned.  Bryan Jackson, a partner at accountancy firm BDO, which made the predictions said that “rising utility bills, higher food costs and frozen wages” meant that people struggling with debts were also only able to pay off the interest rather than the amount they borrowed. Such individuals could be “tipped over the edge” by increases in their living costs or reductions in eg, overtime payments, he added, or by changes in personal ­circumstances such as divorce or unemployment. Jackson added: “Although the number of Scots being made bankrupt has reduced in the past few years from a peak of 23,500 in 2009, …

Bankrupt Scots

The recent downward trend in the number of individuals and companies going bankrupt in Scotland has reversed dramatically in recent months, official figures show.

In the first quarter of 2013-14 (April to June) personal insolvencies were up 14.7 per cent and corporate insolvencies were up 28.7 per cent.

Bryan Jackson, business restructuring partner with BDO LLP, said the rise in payday and short-term lenders points to "serious financial problems among thousands of Scots".

Mr Jackson said: "Following recent falls, the increase in the number of personal insolvencies in the second quarter suggests that the pent-up indebtedness of many individuals has burst through.There is little doubt that many individuals have been living from month to month, or week to week, simply feeding the interest on their debts rather than reducing the debt itself. Until now, this has delayed some from falling into insolvency, but this quarter's figures suggest that their financial situation …

A prosperous New Year ?

Accountancy firm PKF has predicted more than 20,000 people will be declared insolvent in 2012. The report claimed even relatively affluent Scots could find themselves unable to cope with the downturn. PKF also predicted an average of 25 Scots firms a week would go bust this year.

Bryan Jackson, PKF corporate recovery partner, said: "...the fluctuations in the economy, the difficulties in the eurozone, and the clear impact of public sector cuts is increasing the number of Scots facing financial difficulties." He added: "The dramatic rise in the number of more affluent Scots being made bankrupt is a further sign that the after-effects of the recession are spreading among all sectors of society, with the result that I believe all personal insolvencies will continue to rise and remain at high levels for several years to come."

Insolvency trade body R3 Scottish council member John Hall said : "Many Scots are in a situation where they simply cannot survive any …

capitalism won't collapse

Official figures released last month by the Accountant in Bankruptcy showed that a record number of Scottish firms went to the wall in the three months to 30 June. The number of Scots companies failing rose by 19.7 per cent quarter-on-quarter.

Matt Henderson, business recovery and insolvency partner at accountancy firm Johnston Carmichael, said: "This makes for truly miserable reading, particularly when we see the stock markets in global meltdown."

"I believe that many of these failures are among smaller Scottish firms and that some will simply be victims of larger firms going bust. The 'domino' effect of larger firms taking smaller firms with them is well known but I have seen many examples of firms who were not massively in debt but who simply lost their order book when a larger company went bust."Bryan Jackson, corporate recovery partner at accountancy firm PKFwarned: "I have continued to see many long-established, well-known businesses going bust. S…

Paying the Price

The number of people going bankrupt has seen its biggest quarterly rise in three years, up 25% on the previous quarter.

Official figures from insolvency supervisors Accountant in Bankruptcy (AiB) showed 5,319 personal insolvencies in Scotland in the first quarter of the current tax year. It is the biggest increase since 2008.

Citizens Advice Scotland chief executive Lucy McTernan said many Scots struggling with heavy debts were choosing bankruptcy as the "lesser of two evils".
She said, "If you are struggling with debt which has become unmanageable, and you really can't see a way out of it, then bankruptcy can be your only realistic course of action."

Experts warned the increase is only the "start of a trend" in the months ahead as the full impact of spending cuts and a stagnant economy start to bite.

Bryan Jackson, corporate recovery partner with accountancy firm PKF, said: "This dramatic rise in the number of personal bankruptcies in Scot…

A bankrupt society

A record number of Scots will be made bankrupt in 2011, according to accountant and business adviser PKF. Accountancy firm RSM Tenon also predicts that personal insolvencies in the UK will set new records in 2010 and 2011.

PKF predicts that final figures will show about 22,000 Scots were sequestrated (the Scottish term for bankruptcy) or took out a Protected Trust Deed (PTD) in 2010, or 425 a week, and that this year will see even higher levels of personal insolvency. Personal bankruptcy during 2011 will be impacted by the Comprehensive Spending Review (the full impact of the CSR is yet to be felt) , which is likely to result in higher levels of unemployment among public sector employees, and potentially by the effects on mortgage-payers of rising interest rates.

“Many people are only able to cling on to their homes as long as their mortgage payments are being kept at an historicallly low level due to the 0.5% base rate. Once interest rates start to rise, I believe we will beg…

credit crunch bites

The number of Scots declared bankrupt is rising at record levels, figures have revealed.
Finance experts PKF said in the third quarter of 2008, 5,998 people had been made bankrupt or entered a voluntary repayment agreement with creditors.
The firm said this was an increase of 26.7% on the previous quarter and a 70% rise on the same quarter of 2007.
A total of 14,008 Scots have been made bankrupt so far this year, while the total figure for 2007 was 13,814.
PKF said around 20,000 Scots could be declared bankrupt by the end of 2008.

Bankrupt Scotland

From an editorial in The Herald

Although it is traditionally people on the lowest incomes who get into debt they cannot repay, the boom in consumer credit, fuelled by rising house prices, has brought many middle-class families to the point where they are only a couple of pay packets away from not being able to meet their repayments. It only takes one setback, such as their marriage ending or losing their job, to plunge them into unmanageable debt.

The 14.5% increase in the number of Scots being declared bankrupt between 2006 and 2007, however, is likely to be a harbinger of worse to come. The scale of the situation is brought home by the fact that the 1563 Scots declared bankrupt in the last quarter of 2007 amounted to nearly twice the average number for any three-month period three or four years ago.
This is a reflection of the record levels of personal debt (one estimate of Britain's debt from credit cards, loans, overdrafts and mortgages is £1.35 trillion) but when that level of …

Preferential Treatment

How different the government can respond to some financial woes .

Mr Darling told MPs the government had a clear duty to protect the public interest . The government put up huge loans to save the Northern Rock bank , emergency funding equivalent to twice the amount of the annual primary school budget. Deposits of savers would continue to be fully guaranteed .

Contrast now the collapse of the Farepak Christmas savings club that last year drove many of its low-income victims into a cycle of debt according to a union-sponsored report . Many of those affected were low-paid women saving small sums for Christmas who went into debt to buy the gifts they had been expecting to purchase with their Farepak savings . Over 122,000 people have lodged claims , and they have been told to expect just 5p in the pound for their claims, and that there will be no payout this year.

Centre for Crime and Justice Studies Director Richard Garside. said "Many Farepak customers are asking why, if the gover…

The Bankrupt System

Research based on a study of 1,250 bankrupts in England and Wales found the proportion of pensioners going bankrupt has more than doubled in five years . Of bankruptcies in England and Wales during 2007, 7% involved retired people - up from 3% in 2002 . This meant 7,900 pensioners were declared bankrupt over the past year, compared to 900 five years previously.

Researchers warned that the figures are likely to get even higher, as increased life expectancy and rises in the price of food and fuel put a greater strain on the limited savings of many pensioners.

Keith Stevens, insolvency partner at Wilkins Kennedy, said: "More and more pensioners are going bankrupt as they struggle to repay debts when their pension is their sole source of income. "

Senior citizens could be missing out on money to which they are entitled because of the complexity of the government's pension credits system

Older people unused to being offered credit "may take on unmanageable levels of debt&quo…