Around 14,000 Scots were declared insolvent in the first nine months of this year, with the figure already higher than the total number of financial casualties for 2007.
Around 14,000 Scots were declared insolvent in the first nine months of this year, with the figure already higher than the total number of financial casualties for 2007.
Figures released yesterday by the Insolvency Service showed a 70% rise in those who went bankrupt or entered a Protected Trust Deed between June and September compared with the same period last year.
A total of 4055 Scots had their assets seized following court action in the last quarter and a further 1943 chose the trust deed route, where debts are frozen and a legal arrangement made on manageable repayments.
Analysis released by Glasgow-based accountants PKF concludes that the average Scot who embarks on a trust deed is 43, a home-owner, and had separate debts of just less than £41,000.
The firm also predicted that the number of those either going bankrupt through the courts, or taking out a trust deed, will rise to around 19,000 by the end of 2008. Last year, 13,814 entered a formal arrangement to alleviate their financial stresses.
The PKF research also concluded that, of those taking out a trust deed, around one-fifth were under 30, and another 20% had debts of under £20,000. They were more likely to be male (55%) and had, on average, £42,657 worth of debt, compared to the average female debt of £37,592.
Anne Buchanan, corporate recovery partner with PKF, said: "What these figures tell us is that individuals have already been experiencing serious levels of indebtedness prior to the credit crunch taking hold.
"Accumulating debts of over £40,000 usually takes several years and this will be the result of a long period of building up more and more debt on credit cards and unsecured lending. This situation is going to get worse before it gets better.
"It is very likely that we will see many more individuals have to take the extreme action of becoming insolvent in the coming years as the banks and lenders become less sympathetic and willing to continue lending to many more people. This will result in ever higher numbers of individuals being made bankrupt.
"With unemployment rising and corporate insolvency also increasing, the coming year is going to be tough for everyone and we will see these figures get higher before they reach a plateau."
Ms Buchanan added that although the drop in interest rates was welcome it would take some months to filter through, with many "teetering on the brink of insolvency".
She said: "Christmas is always a difficult time of year financially, but it is essential that individuals don't simply ignore their financial problems as there will be an enormous fallout in the New Year if they spend recklessly in the next seven or eight weeks."
Blair Nimmo, head of restructuring at KPMG Scotland, added: "These figures are of grave concern - as the credit crunch bites, many creditors are tightening their lending policies to consumers and requiring existing payment plans to be met. For those struggling with the increased cost of living, meeting current repayment plans can push them into bankruptcy.
"Today's figures are a warning to Scots to take control of their debts before it becomes too late. I fear the consequences could lead to thousands more Scots having to resort to bankruptcy."
Mr Nimmo advised those who suspected they could become insolvent to take advice "the moment they realise they have a problem".
He said: "The majority of people who come to see me have left it to the last minute and therefore their choices are limited; they should gather all the facts and speak to one of the many independent consumer credit agencies as soon as possible.
"These organisations offer free and impartial advice, and will recommend the best way to solve their financial problems."
