More Scots affected by financial stress

Bank notes More than 5,000 people were declared insolvent during the second quarter of 2011.

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Latest figures on personal insolvencies in Scotland point to an increase in financial stress across the country.

The Accountant in Bankruptcy (AiB) said more than 5,000 people were declared insolvent during the second quarter of 2011 - a rise of 4% on the same period last year.

Although bankruptcy awards dropped by 8%, Protected Trust Deeds increased by 22% on the same period in 2010.

A trust deed is an alternative to bankruptcy for people in debt.

It involves a monthly payment arrangement with some creditors and often involves some of the debt being written-off.

Meanwhile, 361 companies became insolvent or entered receivership during the second quarter of 2011 - a 46% increase on the same period last year.

Insolvency is when an individual or firm has no means to repay debt, whereas a bankrupted person or firm has assets to sell in order to pay off the debt.

Enterprise Minister Fergus Ewing said: "Personal insolvencies for this period have increased slightly while bankruptcy awards have gone down which may be attributed to the increase in number of protected trust deeds as well as the success of the Certificate for Sequestration, introduced in November 2010 to give much-needed debt relief to individuals who previously didn't qualify.

"The notable increase in debt payment programmes approved under the Debt Arrangement Scheme was expected following AiB's efforts to raise awareness of improvements which were made to the scheme in July this year."

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