Bankruptcy ‘Increasing In Scotland'

Recent figures released by the Accountant in Bankruptcy found that the number of companies going to the wall has risen by over 150 per cent compared to the same period the previous year. In real terms, this amounts to more than 3,700 businesses going under. The number of individual insolvencies has also soared - by around two thirds to nearly 5,700.

In England Company winding-up petitions increased by nearly a fifth. Debtors' petitions increased by more than 10 per cent year on year. Creditors' petitions, meanwhile, actually fell by nearly a sixth.

Although there are special provisions for this happening in Scotland, these, generally, are the facts: A bankruptcy stays on a credit file for a total of six years. It can destroy a person's chances of ever gaining credit or insurance again. It could even count against someone applying to rent a flat or house. Fees are also a key issue - someone wanting to go bankrupt will have to pay court fees for the proceedings.

The government's advice with regard to bankruptcy is pretty simple - look at all options available to you. "Before you take any action to apply for your own bankruptcy, you should get your own legal or financial advice," it says. The Insolvency Service does offer tips and guidance wherever it can. Qualified accountants, an authorised insolvency practitioner or a reputable financial advisor are all also suggested as sources of information. These people can advise on tax credits and benefits.

Also on offer are IVAs. These agreements run through the county courts and have to be arranged through an Insolvency Practitioner. They can run for a period of five years and are a formal agreement between businesses and creditors that a reduced amount will be paid back. They are based around one, "affordable", monthly, payment, over a period of 60 months, which is based on earnings minus expenses. These types of agreements are a good to go, as they are legally binding, as opposed to many companies who advertise debt solutions which are based on "gentlemen's agreements". On the downside, however, this agreement stays on a person's file for a total of six years.

If you would like to know more about bankruptcy why not ask AnswerBank Business and Finance.