Top 10 things to consider when seeking debt help and advice in Scotland

May 30, 2015

Whether financial trouble has hit because of redundancy or ill health, or you simply overspent on credit cards, before looking for debt help in Scotland it would be worthwhile considering the following factors:

  1. You can get debt advice free of charge

The Scottish Financial Health Service steers people in debt towards professional money advice from charities and other support organisations. Your financial situation is examined before you can apply for a formal debt solution, to make sure that you take the most appropriate route for your circumstances.

  1. A ‘Common Financial Tool’ is used to maintain consistency

If you enter a formal insolvency procedure in Scotland, the ‘Common Financial Tool,’ introduced by the Scottish Government in April 2015, will be used to establish your eligibility and the level of repayments you need to make.

  1. Debts should be divided into categories – priority and non-priority

Priority debts include mortgage or rent repayments, loans secured against your home, tax and National Insurance, Council Tax and utility bills – basically, those that are needed to keep a roof over your head, out of trouble with the tax man, and keep the lights on.

  1. You need to negotiate with creditors

If you haven’t already done so, you should contact your creditors to negotiate for extended payment terms. Most creditors would prefer you to let them know your financial position. You may be surprised by how many are willing to let you pay over a longer period of time.

  1. Consider the effect on your credit file

You may be able to limit the damage on your credit file if you begin negotiations with creditors as soon as you are aware that you cannot pay.

  1. Are you claiming all your benefits?

Many people fail to claim all the benefits they are entitled to, and which could help them escape debt sooner. If you have lost your job through ill health or redundancy, you should check your eligibility for state benefits.

  1. Not all debt solutions will stop creditor action

Being threatened with legal action is one of the main reasons people in debt seek professional advice, but it’s worth knowing that not all debt help in Scotland would stop you receiving letters and phone calls from creditors.

  1. Your debt situation could be made public

You may appear on a public register or in the Edinburgh Gazette if you enter formal debt procedures. This could affect your employability if there is a clause in your contract of employment relating to debt.

  1. A fee will be charged for formal insolvency proceedings

This may be deducted from the consolidated monthly payment you make to your creditors. A Trust Deed could cost in the region of £3,000 to £5,000; in the case of sequestration, the fee for a petition is £200.

       10. You could use a lump sum in final settlement

If you have access to a cash lump sum, it may be worthwhile offering this to your creditor(s) as a final settlement. Even if it does not cover the whole amount, they may feel it is in their best interests to accept.

Getting debt help in Scotland has been formalised since the Bankruptcy and Debt Advice (Scotland) Bill was brought in. The system offers independent debt advice free of charge.

Scotland Debt Solutions have offices throughout Scotland, and can advise on the best course of action for your type of debt.

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