How to clear debts in Scotland

You have a number of options when looking to clear your debts as a Scottish resident. One of these is to simply continue to pay your creditors as and when your monthly repayments fall due. However, if you have a number of debts, are being charged a high rate of interest, or the amount you owe has spiralled out of control, this may not be possible.

The good news is that there are three formal insolvency options you can enter into in order to deal with your debts and clear them for good. They are:

• Trust Deed – A Trust Deed is a formal repayment plan entered into by an individual and their creditors. Trust Deeds typically last for four years, during which time you will be required to make a single monthly payment towards your debts which will then be divided between those you owe money to. Your monthly repayment will be an amount which is affordable to you, and any debt which remains at the end of the four years will be written off. Therefore, a Trust Deed ensures you will clear your debts in just four years, so long as you make the agreed monthly payment for the duration of the arrangement.
• Debt Arrangement Scheme (DAS) – A Debt Arrangement Scheme gives you a longer period of time to clear your debts than a Trust Deed. A DAS can be the most appropriate solution for those who want to clear their debts but also protect their assets such as their home or car. While it may take you longer to clear your debts under a Debt Arrangement Scheme, your payments will be set at a level which is affordable, and you have the flexibility to adjust these should your financial position change in the future which may allow you to clear your debts earlier.
• Sequestration (Bankruptcy) – Sequestration is the Scottish equivalent of Bankruptcy, and this is typically seen as a last resort for clearing debts which have got out of hand. While sequestration does have a serious impact on your credit file and your ability to access credit in the future, in some instances, it is the only way to deal with debt which cannot otherwise be repaid. Before considering sequestration, you should speak to a licensed insolvency practitioner to explore this option as well as any alternatives which may be more appropriate. The experts at Scotland Debt Solutions can provide this advice free of charge.