The number of people becoming insolvent in Scotland has hit an all-time high, according to analysis of new figures.

Insolvency Service statistics showed there were 4,735 personal insolvencies in the second quarter of 2008, up 35.4% on the same period last year.

Accounting firm PKF said the second quarter of 2008 had seen the highest ever quarterly figures for personal insolvency in Scotland.

New bankruptcy legislation came into force in April.

The change brought Scotland into line with the rest of the UK and means the period a person has to spend as a bankrupt has been reduced from three years to 12 months.

Other legislation, which also came into force at the same time, gave a wider group of people access to the bankruptcy process.

Instead of having to wait for court action against them, certain debtors can start the process themselves.

Matt Henderson, business recovery and insolvency partner with accountants Johnston Carmichael, said he expected the number of Scots going through the bankruptcy process to reach "record levels" in 2008.

He added: "I really do wonder if the pendulum has been allowed to swing too far to the benefit of debtors.

"For some people the access to relief from their debts is just too easy."

Mr Henderson said the credit crunch had worsened the position for people in financial difficulty.

"These latest statistics could well get much worse due to the effect of increased household energy costs and higher borrowing costs", he said.

Business liquidations

Meanwhile, figures also showed that the number of Scottish businesses falling into liquidation rose by almost 30% in the second quarter of 2008.

In Scotland, the number of businesses going into liquidation topped 132 between April to June, compared to 102 between January and March this year.

According to Blair Nimmo, head of restructuring for KPMG in Scotland, "there can be little doubt that the credit crunch is now really beginning to bite".

The worst failure rates in Scottish business came from the property, construction and real estate markets, which saw 60 businesses go under, while hospitality saw 12 and retail saw 11.



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