As many as 40 Scottish people are expected to be made bankrupt every day in 2014, according to accountants and business advisers BDO.
The firm is predicting that just under 15,000 Scots will have been sequestrated (the Scottish term for bankruptcy) or taken out a Protected Trust Deed (PTD) by the end of 2013, and that a similar figure will go bust by the end of 2014.
Rising utility bills, higher food costs and frozen wages have all meant that many indebted individuals are unable to clear debts but are simply paying interest.
Any change in their circumstances either through unemployment or divorce will mean that these individuals are unable to cope and will quickly succumb to bankruptcy. These so called ‘zombie’ individuals are living with long term accumulated debts but cannot repay any of the capital.
“There are signs that the economy is beginning to recover and that the six year period in the economic doldrums is coming to an end. However, for many individuals debts which were accumulated years ago continue to plague them and they are extremely susceptible to any changes in their personal circumstances,” explained Bryan Jackson, business restructuring partner with BDO LLP.
“A reduction in overtime payments or increases in living costs can tip these individuals over the edge. They may then use payday loans to cover themselves in the short term but the debts will simply accumulate and eventually they will be made bankrupt,” he added.
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