Recent data indicates that personal insolvencies in Scotland rose by a dramatic 137% in stark contrast to figures published on Protected Trust Deeds (a version of an IVA north of the border) which suggest a modest 1.6% increase quarter on quarter.  This of course reflects only those who have approached a licenced insolvency practitioner to establish such an arrangement. These figures may seem counter intuitive when set against other data that suggests Scottish homeowners have emerged relatively unscathed from the housing price slump with just 1% of Scottish owner–occupiers in negative equity.

However, that may help explain the relatively low ratio of those successfully going through the PTD route. People whose finances are now stretched to breaking point still retain sufficient equity in their property to make a PTD acceptance unlikely as creditors will be inclined to deny any “IVA-like” suggestion and propose that the debts are paid in full when the equity remaining in the property is greater that the total debt owed.

More immediate and practical action is available to reduce the levels of unsecured debt at least on a UK-wide basis using key changes to the Consumer Credit Act 1974 that apply nationwide.  This approach means that the total balance on some credit cards and unsecured loans issued before 6th April 2007 could be cleared completely.The strategy of challenging enforceability through scrutiny of “true copies” of agreements has been proven in the English courts, with several recent court cases concluding that the debts were indeed disputed on substantial grounds and that the agreements were indeed unenforceable.

There is no reason why this approach should not be equally successful in Scottish Sheriff Courts.  Indeed a company called Credit issues successfully removed one client’s liability to credit card debt, despite it being assigned by a major lender to a debt collection agency, and he was able to clear the entire balance of £16,029.50.  Irrespective of who the credit card or unsecured loan provider is (even if that debt has been “sold” to a debt collection company), so long as the balance is over £2,000 you could clear your credit card or unsecured loan debt and also reclaim any mis-sold payment protection insurance or accident sickness cover together with interest.This action will at least will take the pressure off and reduce the gross amount of debt outstanding.