Bankruptcy numbers fall in Scotland

The number of people applying for bankruptcy in Scotland has fallen during the period July 2012 to August 2012 with a fall of around 27.5% compared to the same period last year. This comes at a time when the UK economy as a whole is struggling, despite today’s news that the UK is officially out of recession, and many people believe that the Eurozone issue is far from resolved. Therefore, it may seem a little surprising to learn that bankruptcy applications in Scotland have fallen but is there an underlying trend?

Economic data

The economic data with regards to Scotland and the UK is not very impressive at this moment in time, despite today’s news of a 1% increase in GDP during the last quarter, and more people will struggle to make ends meet in the short to medium term. The issue of independence in Scotland is also having an impact upon the economic performance of the country and while politicians from all sides will have different arguments, the truth is that no large companies are willing or indeed able to invest enormous amount of money in Scotland until the economic situation is clear.

Why are bankruptcy applications down?

The fall in individual bankrupt applications is dramatic to say the least although it could in some ways be the calm before the storm if the political situation across Europe and indeed across the world worsens again. It was also interesting to see that corporate insolvencies fell by 24.1% during the same period compared to last year. This is obviously giving some hope for the future but the reality is that we all need to remain calm, remain focused and not become complacent.

Trust deed applications

While the financial press tomorrow will be highlighting the fact that bankruptcy applications for individuals and insolvency applications for corporate entities have fallen dramatically compared to the July/August period last year, what has happened to trust deed applications? Figures released today by the Scottish government show that these figures have remained relatively static over this period which would suggest that some of the former high earners and the middle classes are now struggling to make ends meet.

Historically protected trust deeds have been used where an individual or a family’s financial situation looks set to change for the worse in the short term. It is a means of giving sufferers a bargaining point from which to open talks with their creditors and try to arrive at a situation which suits all parties in the short, medium and longer term. It will be interesting to see if trust deed applications fall in the short term, as this would be very positive news, even though many experts believe this is unlikely to happen.


Over the last few months we have seen some very damaging headlines with regards to the Scottish economy, the Scotch independence referendum and indeed the political scene in Scotland. For many businesses and individuals the reality is that until the issue of independence is resolved, one way or another, there will be uncertainty, there will be pain and ultimately corporate entities will be reluctant to invest large amounts of money in the country until they know what the future holds.

There is speculation that both personal and corporate taxes would increase if Scotland was to go independent but taking a balanced view of the situation not one political party nor one political group is not biased. The reality seems to be that until the independence referendum is well and truly underway we will not really know what the future holds for Scotland, the short to medium term direction of bankruptcy issues in the country and indeed the overall direction of the economy.

In many ways the Scottish government blames London, i.e. Westminster, if economic data is negative while attempting to take all of the glory if it is positive. Is this really a fair reflection of the overall situation?

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