COMMENTING on figures released by the Accountant in Bankruptcy (“AIB”) showing the number of Scots entering Debt Payment Programmes (“DPP”) under the Debt Arrangement Scheme (“DAS”) increased by 15.9% over the past 12 months, and applications for statutory moratoriums increased by 21.5%, Chris Malloch, Director at Cleanslate.co.uk, said:
“The increasing number of Scots on debt payment programmes is a stark indicator of the extent to which the current cost of living crisis is impacting people across Scotland.
“It’s reassuring that insolvencies have not risen recently. However, with the increase in applications for moratoriums, and rising interest rates, the reality is that more and more people are simply unable to keep up with rising costs.
“We’re also now starting to see an increase in the number of applications by creditors to make people bankrupt, indicating post-COVID forbearance is starting to reduce.
The growth in people accessing DAS or requiring statutory moratoriums, combined with increasing creditor petitions, could indicate a flood of insolvencies and debt payment programmes to come.”
Commenting on how the latest cost-of-living payments will help with this, Chris said:
“A fresh round of cost-of-living payments are now underway; however, these are targeted at those on universal credit or other qualifying benefits. We are being approached by an increasing number of people who will not qualify for those payments and are struggling with their debts. Since 2021, we’ve seen the income of clients entering DAS increase by 11%, indicating middle incomes are starting to feel the squeeze too.”
Chris added: “In our experience over the last couple of years, people accessing DAS needed to cut their debt repayments by £350 per month to bring them out of the red. This month alone, the average reduction needed is currently £795 per month. The cost-of-living quarterly payments of £300 will undoubtedly be helpful to those who receive them, but there is clearly also a rising demand for help for those on middle incomes who are struggling to keep up with their commitments.”
