I have been made redundant after covid-19 and can’t pay my bills

Redundant after covid-19 and can’t pay bills

The covid-19 pandemic has created serious financial difficulties for employers and their staff, with many businesses having to make employee redundancies despite government intervention and support.

So what happens if you’ve been made redundant and you can no longer pay your bills? Initially, it’s important to approach your creditors to see if they’ll accept lower payments, but there’s also a number of debt procedures in Scotland that can help you deal with this worrying situation.

Talk to your creditors

It’s highly advisable to contact your creditors as soon as you know you can’t afford to pay your bills, as it shows that you take payment seriously and don’t want to go into arrears. Your creditors may be open to lowering repayments temporarily, giving you some financial ‘breathing space’ while you look for another job or apply for benefits.  

If they do agree to a fresh instalment plan it’s a good idea to have the new arrangements confirmed in writing, but what if negotiating with your creditors doesn’t work? What other options might be available in this situation?

Debt remedies after covid-19

Debt Arrangement Scheme (DAS)

The Debt Arrangement Scheme is a government backed programme designed to help Scottish people avoid bankruptcy and repay their debts in full. If you can’t pay your bills and have fallen into arrears, DAS offers you an affordable programme of repayment based on your individual circumstances, and usually lasts for four years.

DAS may be an option if your debts are around £5,000 or more and you can’t see a way of paying your bills in the future because you’ve been made redundant. The scheme stops any legal action being taken against you by creditors, and freezes additional interest and charges on your debts.  

Scottish Trust Deed

A Scottish trust deed differs from the Debt Arrangement Scheme in that you have to declare full insolvency. This means a proportion of your debts can be written off at the end of the trust deed term, which also typically lasts for four years.

If you’ve fallen into serious financial difficulty, a trust deed can help you escape the debt spiral that commonly occurs when you can’t pay your bills and creditors are unwilling to negotiate informally.

Sequestration

Sequestration is the Scottish term for bankruptcy, and involves handing over your assets to an appointed Trustee. The assets are then sold and the money used to repay creditors as far as possible.

Although entering sequestration is a drastic step to take, if you’ve been unable to pay your creditors and are in serious debt with no possibility of improving the situation, it can offer a fresh start financially with no creditor pressure.

If you would like more information on redundancy, and what to do if you can’t pay your bills after covid-19, Scotland Debt Solutions can help. Please get in touch with one of our specialist team to see how we can assist you – we offer same-day consultations free-of-charge.