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A Scottish trust deed normally runs for a period of three years; in the rest of the UK the broadly-equivalent IVA debt solution normally runs for five years. Sequestration in Scotland requires a £100 application fee; in the rest of the UK you'll need to find £700 to become bankrupt. The new Certificate for Sequestration in Scotland has unblocked the route to sequestration for many people that were previously trapped in debt. The Debt Arrangement Scheme in Scotland guarantees the freezing of interest and prevents legal debt recovery action against the debtor or their home; a debt management plan elsewhere in the UK provides none of these benefits. The politicians of Scotland appear to have designed and maintained a framework of debt remedies for Scottish residents that compares extremely well to the framework in the rest of the UK.

Meanwhile it has been reported recently that the number of people entering sequestration or a protected trust deed in Scotland has risen while insolvency elsewhere in the UK is in decline. The most recent set of data included the second highest number of people entering into a protected trust deed ever. Are Scottish or Westminster politicians responsible for Scotland experiencing personal debt distress on a scale not seen elsewhere in the UK? Wouldn't debt-related efforts be better focused on prevention rather than cure?

The statistics behind this situation indicate that blaming politicians for Scottish debt problems may in fact be unfair. The need for the debt arrangement scheme, sequestration or a Scottish trust deed is based upon the repayments having become unaffordable. The key factor would therefore seem to be how much personal debt Scots have on average. The most recent data suggests an average of £8399, which is lower than every other UK region except Wales. People in Scotland aren't being forced into trust deeds because the nation, on average, is more indebted than other parts of the UK.

Unemployment is often to blame for debt problems. Often those who enter into a protected trust deed or the debt arrangement scheme have often suffered a period without work during which their debts went up. However, unemployment statistics for Scotland are little different to the UK average. Hourly pay in Scotland is also close to the UK average so poor earnings don't seem to be the root cause of the recent 6.5% increase in protected trust deeds.

High mortgage and housing costs in Scotland also cannot be blamed. The average house price in Scotland is £70000 less than the UK average.

So why are protected trust deed and debt arrangement scheme numbers on the rise? It would seem the economic environment in Scotland, for which politicians are also responsible, is not disproportionately geared up to push Scottish residents into debt compared to other parts of the UK. The powers that be appear to have done no worse than is the case in other UK regions, and in fact in some comparisons they stand up rather well.

So why is the insolvency rate so comparatively high in Scotland? Who, or what, is to blame?

Hundreds of thousands of people in the rest of the UK are believed to be in debt management plans for which no reliable statistics are reported. Would these people have used a protected trust deed with a three year term when a five year IVA just seemed too long? Have people in Scotland been able to go ahead with sequestration because a £100 fee is viable where a £700 fee cannot be saved? Are people in Scotland choosing the (measured and reported) debt arrangement scheme rather than a DMP which brings few of the benefits of DAS?

Is it possible that the improved framework of debt solutions in Scotland simply means a higher proportion of those in serious debt feel able to take the steps necessary to deal with their debts? Would insolvency and debt solution rates elsewhere in the UK increase with the same access to a protected trust deed, the debt arrangement scheme, or sequestration?

Trust-Deed.co.uk is a website that provides information and interaction in connection to personal debt in Scotland. Linking the public to protected trust deed and debt arrangement scheme experts, the site facilitates the sharing of information that is invaluable when facing up to debt difficulty. The trust deed forum on the website also enables individuals to share personal experience about this sometimes confusing and stressful subject.

By Charlie Maine
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