Confusion over Debt Payment Programmes and Scottish debt figures

17th August 2010

Recently reported statistics for the first quarter of 2010 revealed Scottish trust deeds and bankruptcies dropped significantly (16%) compared to the same period last year. In comparison, the number of Debt Payment Programmes under the Debt Arrangement Scheme increased by 60% over the same period.

Minister for Community Safety, Fergus Ewing, released comments indicating his belief that the statistics were, “... a possible indication that people are seeking advice at an early stage and choosing a debt solution appropriate to their circumstances.”

There may well be some truth in these comments. Debt advisers are well aware that the sooner an individual in financial trouble seeks advice, the less serious the options to resolve the problem may be. This could account for the increase in the proportion of the overall statistics made up by Debt Payment Programmes under DAS.

However, the figures are limited by the fact that no reliable record exists of the number of people in Scotland entering debt management plans. The rise in the number of DPP’s may simply reflect better publicity of the scheme by the AIB and greater confidence amongst Money Advisors to use DAS. As such the increase in the number of DPPs may simply reflect a corresponding drop in debt management plans, rather than being any broader sign that people are taking advice on debt sooner.

The situation is further confused by reports from the Consumer Credit Counselling Service (CCCS) in Scotland that calls to their debt advice hotline have recently increased by 22%. Liz McVey, the manager of CCCS Scotland was reported as saying: “The rise in people from Scotland seeking help with their debts in the past six months is very worrying”.

So is the wider personal debt situation in Scotland getting better or worse? The Government is interpreting the reduction in bankruptcies and Scottish trust deeds as a sign that their policies are working.

However, without the numbers for those reporting debt management plans in Scotland, the official statistics can be interpreted in differing and contradictory ways. Meanwhile the debt help lines are reporting significant increases in calls from over-indebted individuals needing help.

The situation remains very confused. The next set of quarterly statistics for bankruptcies and Scottish trust deeds (in October) may provide some further clues.

If you’re experiencing tough times financially visit www.trust-deed.co.uk where our Scottish deed forum offers all the help and advice you need.

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