Bankruptcies double as 11 go to the wall every working day

THE number of people being made bankrupt in the Lothians has soared to almost 11 every working day.

Bankruptcy cases increased from 675 to 1,298 in the first half of the year, up 92 per cent.

And experts today warned the situation was likely to get worse before it gets better, with recent job losses yet to affect the personal bankruptcy figures.

Lothian and Borders had the second-largest rise in people declaring bankruptcy to wipe out their personal debts in Scotland after Glasgow.

Experts cited a decade of easily available credit cards and unsecured personal loans for the huge number of individuals turning to the last legal route out of debt. The statistics, broken down by sheriff court areas, were released by the Accountant in Bankruptcy, which administers personal bankruptcy in Scotland.

Glasgow emerged as Scotland's bankruptcy capital, with the volume of people seeking legal protection from creditors soaring by 128 per cent in the first six months of this year.

A total of 7,526 Scots were declared bankrupt between January and June, compared to 4,316 during the same period last year. The debt crisis north of the Border is twice as severe as in England and Wales.

Louise Brittain, a specialist in personal insolvency with global accountants Deloitte, said residents in cities were hardest hit.

She said: "It is a combination of the cost of living and living in the city, which is more expensive. There is a culture of going out to eat and shopping and it is easier to get into credit card debt because there are more options for spending disposable income.

"With the credit crunch and more redundancies you end up with thousands of people unable to service unsecured credit."

Ms Brittain predicted the number of personal bankruptcies would continue to rise for months, if not years, as the full effect of job losses in the financial sector is felt in Edinburgh.

"Bankruptcy comes a long time after people start being pursued for unsecured debt," she said. "It's only when it starts to affect your mortgage and wages that you then start to think about bankruptcy, so there is normally a lead time of nine months to a year."

Tom Buchanan, the city council's economic development leader, said:

"The issue now is, how are we going to help these people recover? The council can help by pointing people in the right direction for advice and support, working with other agencies."

The Scottish government said increases in bankruptcies had been anticipated with changes to the law in April 2008.

The Low Income, Low Asset rules were introduced to make it easier for people on lower incomes to declare themselves bankrupt.

A Government spokesman said: "We are working to do absolutely everything we can to support Scottish business and families during these tough times."