The Coronavirus Job Retention Scheme (CJRS), or furlough, has been extended until 30th September 2021. The scheme has been instrumental in protecting jobs in Scotland and throughout the UK, and covers 80% of employees’ normal salaries.
So what happens when furlough ends for Scottish employees? What support will be available to help people avoid or deal with unmanageable debt after the coronavirus pandemic?
Professional guidance is crucial when you’re struggling with debt, or you’re unsure about your finances, so where can you go for specialist help when the furlough scheme ends in Scotland?
There are various sources of free debt advice in Scotland, including debt charities, money advisers, and licensed insolvency practitioners (IPs), who typically offer initial advice free-of-charge.
Straightforward advice on budgeting, how to reduce your outgoings, or claim the benefits you’re entitled to, may be the only support you need to regain control of your finances. If you’re made redundant when furlough ends, however, you’re likely to need more specific assistance.
Scotland offers a range of formal debt procedures if your situation becomes serious, and you can no longer manage your bills and debts when the government furlough scheme ends.
The Debt Arrangement Scheme is backed by the government, and available to residents of Scotland. It involves setting up a debt payment plan that’s based on your disposable income, which allows you to repay the money you owe over a longer period of time.
No debt is written off, but interest and charges are frozen and then written off at the end of the agreement. A further benefit of DAS is that creditors cannot take any legal action whilst the plan is in place. The Debt Arrangement Scheme is typically beneficial where there are debts of £5,000 or more.
A Scottish Trust Deed is a formal arrangement to repay a proportion of debt, usually over a four-year period. Scottish Trust Deeds offer an alternative to sequestration, which is the Scottish term for bankruptcy.
Once furlough ends for Scottish employees it’s important to have access to a formal repayment plan such as this, so that bankruptcy isn’t the only option when debt levels are unmanageable.
Entering sequestration, or bankruptcy, is typically a measure of last resort, but it allows you to become free of debt and start afresh financially. It involves handing over control of your assets to a Trustee, and could be an option if you can no longer manage your debts.
If your financial circumstances allow, you may also be required to contribute to the debts on a monthly basis over four years. As we mentioned earlier, sequestration is a last resort but if your financial situation worsens when the furlough scheme ends, and other solutions aren’t suitable, it may be the best option.
Scotland Debt Solutions can provide more tailored advice on what will happen when furlough ends for Scottish employees, and the further support available. Please get in touch to arrange a same-day consultation free-of-charge.
The breathing space debt moratorium in Scotland enables people in debt to trigger a six-month period that’s free of creditor action, so they can take stock of their situation and formulate a plan.
The Debt Arrangement Scheme in Scotland, or DAS, enables people in serious debt to repay their creditors in full over a longer period of time.
Our Scottish based team can help advise you on your debt problems.