Quickly clearing your debts allows you to take control of your financial situation and start saving for the future. Once you’ve cleared your debts you can put the money you were using to repay, towards an emergency fund that helps prevent debt in the future, or to start a nest egg.
But what processes are available in Scotland that enable you to escape debt when you’re under huge financial strain? These are the three main debt procedures that could help you clear your debts.
The Debt Arrangement Scheme, or DAS, allows you to repay your debts in full over a longer period of time than was stated in the original agreement or contract. Interest and charges on the debts are also frozen when you enter DAS, but the process does require you to earn a regular income.
The time it takes to clear debt via the Debt Arrangement Scheme varies according to the amount of debt you have outstanding and the income available to you. A DAS administrator formulates a debt payment plan and you benefit from having no charges or interest added to the amount you owe, as well as a break from creditor pressure.
A Scottish trust deed is an official debt solution that provides a formal structure for clearing your debt. It typically last for four years, and offers a respite from creditor legal action whilst you repay a pre-agreed proportion of the amount outstanding.
To be eligible for a trust deed, you generally need to owe unsecured debts of more than £5,000, and your creditors must agree to the proposal put forward by the trustee. If creditors sanction the trust deed it becomes ‘protected’ and they can’t take legal action as long as you adhere to the terms and conditions.
Sequestration is the term for bankruptcy in Scotland, and is a procedure that requires you to hand over any assets you own to a Trustee. You may be discharged from sequestration after six months if you have minimal assets; otherwise the term is typically 12 months.
You may also be required to contribute monthly towards your debts for up to four years if you have residual income. Whether this would apply to you depends on your individual circumstances, however.
If you live in England or Wales, debt processes are available that are similar to the Scottish procedures. These include Individual Voluntary Arrangements (IVAs), Debt Management Plans (DMPs), and bankruptcy.
The expert team at our sister company, UK Debt, can offer further advice on the suitability of these procedures under your circumstances, and provide professional guidance you can trust.
Scotland Debt Solutions specialises in helping Scottish people escape debt, and offers valuable support during the process. We can provide advice tailored to your situation – just contact one of the team to arrange a free same-day consultation at one of our offices in Scotland.
The government has introduced a range of measures to help individuals, families, and sole traders in Scotland who are struggling to cope financially due to the coronavirus pandemic.
When you apply for a personal loan it’s important to be open with the lender and tell them exactly what the loan is for.
Our Scottish based team can help advise you on your debt problems.