Depending on your financial situation you will have various avenues open to you. The first and preferred option for most people will be a Scottish Protected Trust Deed.
A Trust Deed is government backed legislation enabling people who are struggling financially with debts over £10,000 to be debt free within 36 months. When entering into a Trust Deed all interest and charges are frozen, plus no legal action can be taken against you.
Another option that may be open to you is to enter into a Debt Arrangement Scheme or Debt Management Plan.
These arrangements are informal agreements between yourself and your creditors.
A Debt Management Plan works by calculating how much you can pay by first prioritising your other debts – mortgage, car, council tax, utilities bills and day-to-day living expenses. Your disposable income is divided and paid in a single monthly payment to your creditors on your behalf. A DAS or DMP can be a good alternative to a Trust Deed and will allow you to make regular payments to your creditors without any interest or charges.
The last option available is sequestration. This is the Scottish equivalent of Bankruptcy. This involves transferring all your assets to an Insolvency Practitioner. The IP is then responsible for selling your assets to pay off your debts. For Debt Scotland this is the last option and we do everything within our power to ensure that sequestration is not an option when finding a debt solution. Sequestration only happens when debt advice is not taken early enough and no other options are available.
A Protected Trust Deed is a formal agreement in Scotland that allows a person with debts of over £10,000, that is currently employed or self employed, to become debt free within 36 months.
A Protected Trust Deed prevents your creditors from charging additional interest payments, adding charges and taking further action against you. No more threatening letters or phone calls and no court action will be taken against you.
The main advantages are:
- Write off a substantial percentage of your unsecured debts
- Stop additional interest and charges
- Avoid selling your home or car
- Stop threatening phone calls and letters
- Stop any legal action
- One easy manageable payment
- Fresh financial start
- Your credit rating will be affected
- It will be more difficult and expensive to get credit for the next 6 years
- Some occupations require prior approval before you can enter into a Trust Deed
More Information on Debt Management Plans (DMP)
- You only repay what you can afford
- One easy manageable payment per month
- No hidden costs, everything is included within your monthly payment
- Debt free by end of plan
- No more calls from angry creditors
- Debt Management Plans are not legally binding, so the creditors do not need to agree with the payment schedules. Although, the creditors tend to favour these plans and are happy to cooperate
More Information On Sequestration
Sequestration is the Scottish equivalent to bankruptcy. This is the last option when all other options have been exhausted.
- After sequestration has been administered your creditors will not be able to take any further action against you
- You will most probably be discharged from the sequestration after 3 years and all your debts will be written off
- If you own any valuable items such as property, vehicles or have any savings or investments then it’s most likely that these will be sold by the Trustee
- If you have a regular income then you will need to make some sort of contribution to the sequestration
- You will have difficulty obtaining credit after the sequestration order has finished
Debt Scotland will locate a debt solution provider that is right for your set of circumstances. We offer a service that aims to get you the best deal available on the market. We deal with a wide variety of debt management companies to compare all your available options.