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Thursday, 28 July 2011

Bankruptcies in Scotland reach an all-time high!

The news of increased bankruptcies in Scotland may be of interest to those working in or looking for finance contract jobs - Scotland has certainly had better days. Reports have shown the biggest quarterly rise in the number of people going bust in Scotland since the recession began in 2008. According to the Accountant in Bankruptcies, personal insolvencies reached 5,319 between April and June, up from 4,262 in the previous three months and experts have suggested that this is only the start of a trend - Scotland is yet to feel the full force of the proposed spending cuts and public sector job cuts. It seems likely that the number of Scots becoming bankrupt will continue to increase; clearly, Scotland is still feeling the impact of the recession.
Figures show a 25% increase from the previous quarter and a 1% drop from this time last year. Fergus Ewing, Minister for Enterprise, Energy and Tourism is “encouraged that there has been a reduction on levels when compared to this time last year”. He goes on to explain the increase in individual bankruptcies as a direct result of the success of the Certificate for Sequestration that was introduced in November last year. This was introduced through the Home Owner and Debtor Protection Act to help those in need of debt relief who would not have qualified beforehand.
Iain Fraser, Scottish spokesman for R3, the insolvency professionals’ trade body reiterated the likelihood that insolvency numbers will continue to rise and noted the number of people seeking help through the Debt Payment Programmes awarded by the Debt Arrangement Scheme. 643 people joined the schemes in the first three months of 2011 as a way of avoiding bankruptcy, up 478 (35%) from the previous quarter and up 494 from this time last year. That is a 35% increase from the previous quarter – clearly debt management through this scheme has become a viable option to more Scots than ever!
The number of Scots going bust peaked in the first quarter 2009-2010 at 6,294. Until now, this figure has steadily dropped over recent years and contracting may well become a saviour to those who are currently struggling with their finances and there may be an increase in the number of freelancers looking for finance contract jobs and other UK contract jobs.
Sources claim that it is the better-off are being hit hardest. The recent changes to mortgage payment regulation have undoubtedly delayed the bankruptcies but it is now clear that they have simply been treading water. They have worked to maintain their debts but done little to reduce them, and the recent rise in energy bills and food has pushed many over the edge. Those currently working in or looking for finance contract jobs or other UK contract jobs should keep an eye on further developments – it has the potential to spark a lot of change within the freelancing and contracting industry!

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