RECORD numbers of Scots are going bankrupt as the nation's debt crisis worsens, figures revealed yesterday.

In the second quarter of this year 1,606 people in Scotland went bankrupt - up 23.1 per cent on the same time in 2006.

And a growing number of Scottish businesses are also failing, according to the latest government statistics.

Analysts blamed interest rate rises and more people turning to consolidation loans to deal with a large number of debts.

Yesterday, UK-wide figures also revealed the number of homes being repossessed surged by 30 per cent during the first half of the year.

Homeowners have had to deal with five interest rate rises in the past year, with those on fixed-rate loans facing huge payment hikes when their deal ends.

The Council of Mortgage Lenders said 14,000 homes in the UK were repossessed during the six months to the end of June - 18 per cent more than the previous six months and 30 per cent above the same period of 2006.

Figures for Scotland showed sequestrations - the Scots version of bankruptcy - stood at 1,606 in the three months to the end of June

against 1,505 in the previous three months and 1,305 during the same period of the previous year.

In addition, between April and June some 1,892 Scots entered a protected trust deed - a voluntary agreement to pay a proportion of the outstanding sums. This was down from 1,966 the previous quarter.

In total, the figures mean almost 14,000 Scots have gone through a formal insolvency process in the past 12 months.

Matt Henderson, a business recovery and insolvency partner at Johnston Carmichael, Scotland's largest independent chartered accountancy firm,

said the "aggressive marketing" of debt relief products by companies offering to consolidate people's debts were partly to blame for the insolvency figures.

"People with debt problems are constantly being enticed by advertising messages about consolidating all their debts into one 'easy' monthly repayment," he said.

Andrew Kennedy, head of personal insolvency for KPMG in Scotland, said the figures signalled an alarming trend.

"With five interest rate rises in the last year, the pressure on consumers shows no sign of letting up," he added.

Yesterday's figures also showed 199 Scottish businesses went into liquidation, receivership or administration in the second quarter of 2007, up 17.1 per cent on the same period last year. Businesses have been hit by rising interest rates and higher utility bills in the last two years.

Susan McPhee, head of social policy at the Citizens Advice Bureau, said debt was a huge problem in Scotland.

"In the last financial year we dealt with £211 million worth of debt, compared to £163 million in the previous year," she said.

Shelter Scotland also expressed concern over the rise in repossessions across the UK.

The charity's director, Archie Stoddart, said: "With further rate hikes predicted this year, thousands more homeowners face the misery of repossession and homelessness."

A Scottish Executive spokesman said: "The government is determined to prevent homelessness wherever possible and there are a number of measures in place to assist those who are struggling with their mortgage repayments."

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