When you are in financial difficulty and need to find a solution to your debt problems, there are various formal routes that remove the stress of creditor legal action, and help you get back on the right path.
But you may also be able to help yourself without having to make a formal arrangement such as a Trust Deed or Sequestration. You’ll need to obtain professional advice on your financial situation – in fact it’s a legal requirement before entering formal insolvency, but a qualified money advisor can also suggest and assist with other, informal measures.
A money advisor will look at your finances as a whole, and depending on the extent of your debt and potential creditor action, make suggestions on how to proactively regain control.
You may be missing out on valuable extra income from state benefits, for example. Your advisor will understand the eligibility requirements and let you know whether you’re eligible to claim – it may even be possible to backdate a claim depending on the type of benefit.
They will also offer advice on dealing with your bank – if your account has been frozen, for instance, and help if energy or telephone suppliers are threatening to cut you off. One of the major advantages of seeking professional advice, however, is the assistance you receive in dealing with your creditors.
It’s not always in your creditors’ interests to take legal action against you - chasing payments and taking you to court can be a costly process. Your money advisor may be able to persuade them to stop adding interest and charges to your debt, and let you pay smaller affordable amounts within an informal arrangement called a Debt Management Plan.
An advisor will present a clear picture of your financial position to your creditors, and although this type of agreement is not legally binding, it can be a lifeline while you regain control of your finances.
None of your debts are written off, and a DMP relies on you having a regular income, but a Debt Management Plan is based on the understanding that you just need a little more time to repay.
Although not an ideal solution for everyone, consolidation loans help some people to escape the debt spiral without resorting to formal insolvency solutions. A consolidation loan can incorporate other smaller loans, and generally offers a lower interest rate plus an extended period of time in which to repay.
This serves to reduce your monthly repayment amounts, and can help you to budget for other financial responsibilities. It allows you to take greater control of your finances in general, and can help to rebuild a damaged credit file as long as you keep up the repayments.
These loans can be a good option if you have never consolidated loans in the past, when interest rates are generally low, or if you have equity in a property that can be released via a second mortgage.
Making informal arrangements to repay your debts can be a good solution if you have a regular income, or access to a cash lump sum, and just need a little more time to pay. The professional input from a qualified advisor clarifies your situation for all parties concerned, and will help you consider your options.
Scotland Debt Solutions works solely on behalf of residents in Scotland who are experiencing debt problems. We can arrange a free same-day appointment at one of five offices throughout Scotland to review your situation and offer the best solutions.
The Register of Insolvencies is a public register that documents Trust Deeds until five years after the discharge date and includes personal details.
Joint Trust Deeds don’t exist, however, if you want to run a Trust Deed that encompasses debts as a couple, this will be two individual Trust Deeds.
Our Scottish based team can help advise you on your debt problems.