There is no doubt that the current economic environment is very challenging to both individuals and companies and the news that bankruptcy numbers in Scotland have risen again was disappointing. However, it seems that the pace of increase in insolvency, bankruptcy and trust deed numbers is slowing down amid signs that they have possibly peaked in the short term.
Bankruptcy numbers in Scotland
It was revealed that bankruptcy numbers in the third quarter of the 2011/12 tax year were up by 5% compared to the same period last year with 2615 bankruptcy awards in Scotland. While on the surface this figure does seem disappointing it is worth noting that there is a lag between economic instability and bankruptcy numbers. Indeed it can take many years for financial problems to work their way through the system and for individuals to find the correct path to address their debts.
Insolvency numbers in Scotland
Interestingly it was revealed that insolvency numbers for individuals in Scotland increased by just 2% in the third quarter of 2011/12 compared to the same period 12 months prior. A total of 4664 individuals were deemed to be insolvent and there debt issues are currently being addressed by the relevant parties. This 2% increase is a distinct slowing down of the pace of insolvency numbers in Scotland which has mirrored the ongoing economic difficulties of the country.
Trust deed numbers in Scotland
At this moment in time there are no exact figures with regards to trust deed numbers in Scotland but it is known that the number of trust deed awarded fell by 20% in the third quarter of the 2011/12 tax year compared to 12 months previous. This is a significant reduction in trust deeds in Scotland and was welcomed by the political arena as the potential peak of problems. However, is this really the case?
Debt issues lag the economy
There is growing concern among professional insolvency practitioners that the recent “peak” in insolvency, bankruptcy and trustee numbers is nothing more than a respite between the last recession and the ongoing recession. It is common knowledge that debt problems for companies and individuals lag the economy by a few years as it can take this long for issues to arise and be addressed. So while the slowdown in insolvency and bankruptcy numbers, not to mention the significant reduction in trust deed awards, is welcome this is not the time to take our eye off the ball.
Controlling your debts
These figures seem to indicate a slowing down of financial issues regarding individuals in Scotland although on the ground many people will still be feeling the pinch. There is no doubt that monthly budgets are being stretched to the limit, unemployment numbers are moving higher and there is ongoing concern about the problems within Europe. When you also throw into the mix the Scottish independence issue, which many believe is causing some companies to reduce their investment in Scotland in the short term, there is potential for further difficulty for individuals and companies.
Living within your means
It is all good and well suggesting that those who are looking at potential financial problems should “live within their means” but many people have various fixed costs and families to look after. Therefore, if you are looking towards potential debt problems in the short to medium term you should address these issues sooner rather than later to give yourself the best chance of rectifying your problems or at least giving yourself a chance to recover in the future. There is no point burying your head in the sand and hoping that this will go away because there is no doubt that more and more people will become insolvent, more and more people will seek the bankruptcy route and more and more people will make use of trust deeds Scotland.
Tackling your high interest debts
If you have various debts hanging over you which are causing you financial problems you need to prioritise the amount of money you owe against the interest rate it is attracting. For example, if you have a credit card which has a 0% interest offer for a set period of time then you may well be better off paying down your interest-bearing debt which will grow if left unattended. That is not to say that your credit card debt, at 0%, should not be addressed but if you can limit any potential short to medium-term increase in your debts then that is probably the best way forward.
Despite the fact that many people are feeling the financial pinch there are many people who have yet to actually sit down and look at their finances. Do you know how much you are spending each month? Do you know how much you actually bring home each month? Do you know what your fixed costs are each month?
Check your finances on a regular basis
You should regularly check your finances in the good times and bad times so that you can address any potential problems which may arise in the future. You may also find there are various standing orders and direct debits which are still in place but maybe you don’t need any more or indeed the services they paid for may well have expired. There are many people in the UK who are still paying direct debits and standing orders for services and goods which they no longer receive, are you one of them?
Do you check your bank statements? Over the last few years it has become more and more apparent that ID theft and other forms of fraudulent activity are becoming more commonplace cross the UK. As a consequence you should check your bank statements on a regular basis to ensure that funds leaving your account have been accounted for and you are fully aware of what they relate to. Many fraudsters will sneakily take relatively small amounts of money out of your account on a regular basis under the guise of a common service which may well distract you from the underlying recipient.
Checking your bank statements on a regular basis will also allow you to comprehend where your money goes, where you can make savings and how your budget is actually balanced on a monthly basis.
