There were 4,735 individual insolvencies in Scotland in the first quarter of this financial year; an increase of 44.6 per cent on the previous quarter and an increase of 35.4 per cent on the same period a year ago.

This was made up of 2,853 bankruptcies, an increase of 104.5 per cent on the previous quarter and an increase of 78.3 per cent on the corresponding quarter of the previous year, and 1,882 Protected Trust Deeds (PTDs), virtually no change on the previous quarter and a decrease of 0.5 per cent on the corresponding quarter of last year.

The increase is mainly the result of the introduction in April of a new route into bankruptcy for people on low income and low assets, who previously could not make themselves bankrupt.

The Bankruptcy and Diligence etc. (Scotland) Act 2007, introduced this new route, whereby people who meet certain criteria can apply for their own bankruptcy without proving ‘apparent insolvency’, where a creditor takes court action to recover a debt due. Previously without legal action against them, a debtor could not establish apparent insolvency and was therefore not entitled to apply for their own bankruptcy.

Had the ‘low income, low asset’ route to bankruptcy not been introduced there would have been a decrease of 25.5 per cent compared to last quarter, in the number of debtors applying for bankruptcy in the first quarter of 2008/09, and a decrease of 36 per cent compared to the corresponding quarter of last year.

There were 223 notices of Scottish companies going into liquidation or receivership in the first quarter of 2008/09. This was a decrease of 37 per cent on the previous quarter and a decrease of 9 per cent on the same period a year ago.

For more information click here.