By John Baird

Issues with problem debt remain commonplace around Scotland and the rest of the UK, even with employment levels rising and the national economy having returned to growth in recent quarters. But, while personal debts still become unsustainable for thousands of Scots every year, there are ways in which new laws are helping to reduce the overall scale of financial woe around the country.

Compulsory education

The latest laws around bankruptcy and insolvency in Scotland essentially make three different forms of statutory debt relief instrument available to individual debtors.

These instruments are sequestration, Trust Deeds and Debt Arrangement Schemes (DAS), with the first of these being used only in the most serious cases and a DAS being the least formal or directly consequential of the three.

Within that framework, there have been tweaks to legislation recently aimed at helping individuals with serious debt problems avoid repeatedly entering one or another form of insolvency. To that end, Scotland’s bankruptcy laws now insist that financial education be sought by anyone who has been sequestered on more than one occasion.

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Mandatory advice

Another way in which the latest laws aim to encourage individuals to resolve their financial problems more permanently is through legislation insisting that anyone seeking access to a formal debt relief instrument should also seek advice on how to handle their finances. This legal obligation on the part of debtors is already helping individuals across Scotland to more clearly understand their financial options and the consequences of entering a formal debt solution.

Ideally, fewer consumers around the country would have any need for debt solutions but for those facing up to insurmountable financial problems, advice from experts can be invaluable and the first step towards becoming debt free. The issue of indebted Scots finding themselves in the same difficulties repeatedly over the course of their lives will undoubtedly persist but the latest laws look set to have a positive impact, even if they don’t resolve the problem entirely.

Positive trends

The good news when we look at the personal debt landscape in Scotland is that both short and longer term trends are positive. In fact, personal insolvency rates across the country were recorded as being at their lowest level for a decade at the end of March 2015.

Indeed, according to the Accountant in Bankruptcy, the number of individuals entering either a Scottish Trust Deed or sequestration fell by 19.1 per cent between the first quarters of last year and this year.

All of which paints a broadly positive picture of the way debt problems are being addressed and dealt with in Scotland. However, the laws impacting the industry continue to be assessed, adjusted and added to in various ways and so far the impacts appear to be positive.

Brighter futures

It will no doubt be difficult to determine precisely the effects that laws obliging debtors to seek expert advice or to undertake financial education will have on the wellbeing of consumers across Scotland. But we know that access to appropriate advice and to relevant education can be hugely worthwhile for anyone who finds it challenging to budget effectively or to utilise debt solutions that meet their needs. So for many people the latest laws around bankruptcy in Scotland will indeed make a big difference as intended and help them significantly along the road towards a brighter financial future.

By John Baird

John is a personal finance and insolvency expert from He specialises in advising people on how to manage their money and deal with their personal debt problems.

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