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Staying informed about your personal debt options and rights is important.

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How long does sequestration last?

Q: How long does sequestration last?

A: You are normally discharged from sequestration after 12 months. You will be discharged after 6 months if you enter sequestration through the MAP route. Your Trustee will remain in office for a further period of two years, during which time they may continue to realise your assets. Even though you have been discharged, you must cooperate with your Trustee.

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Whats the difference between an IVA and a Trust Deed

Q: Whats the difference between an IVA and a Trust Deed

A: The main difference between and IVA and Trust Deed is that an IVA can only be accessed by English and Welsh residents, whereas a Trust Deed is only available for residents of Scotland. In an IVA you must have minimum unsecured debts of £15,000 whereas a Trust Deed it is a minimum of £5000. The duration is also slightly different in that an IVA generally lasts for sixty months whereas a Trust Deed lasts for forty eight months.

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How long does a DAS last?

Q: How long does a DAS last?

A: There is no specified timescale for completion of a Debt Payment Programme, as each case is unique and depends on your financial situation. There is flexibility built into the scheme if your circumstances alter, however.

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What are the consequences of not keeping up payments of a trust deed?

Q: What are the consequences of not keeping up payments of a trust deed?

A: The Trustee will write to you every six months throughout the period of your Trust Deed to monitor and assess your Financial Position and your ability to maintain the contribution at the current level.

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What are the advantages of a Debt Arrangement Scheme?

Q: What are the advantages of a Debt Arrangement Scheme?

A: You have more time to pay off your debts Interest and fees are frozen once a Debt Payment Programme has been agreed Your creditors are not able to take any further legal action Debts are consolidated into a single payment that you know is affordable because your financial situation has already been reviewed by a professional money advisor Escalating debts are halted, providing some relief from stress You can avoid full insolvency as you will still be paying your debts in full

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Do my creditors need to agree the Debt Payment Programme?

Q: Do my creditors need to agree the Debt Payment Programme?

A: Creditors generally need to agree to the Debt Payment Programme, but the Accountant in Bankruptcy has the power to approve a Program without the agreement of creditors in certain circumstances.

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Does DAS provide protection from creditors?

Q: Does DAS provide protection from creditors?

A: Yes, this is one of the reasons why the Scottish government introduced the scheme. As long as payments set out in the Debt Payment Programme are met, creditors will not be able to make contact or take legal action against you. All correspondence is dealt with by your DAS Approved Advisor.

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How does the Debt Arrangement Scheme work?

Q: How does the Debt Arrangement Scheme work?

A: A DAS Approved Advisor reviews your income, assets and liabilities to make sure it is the right product for you. A Debt Payment Programme is then drawn up which takes into account your household expenses such as rent, food and utilities, and sets out how much you need to pay against your debts each month, and for how long. This ensures that your living expenses are covered, and that debts are consolidated into a single affordable payment.

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Which debts can be included in a Debt Payment Programme?

Q: Which debts can be included in a Debt Payment Programme?

A: The Debt Arrangement Scheme caters for unsecured debt in the main, including: Overdrafts Personal loans Payday loans Credit cards An amendment to the Debt Arrangement Scheme (Scotland) Regulations 2011 now means that mortgage arrears may be included in a Debt Payment Programme.

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Are any debts excluded from DAS?

Q: Are any debts excluded from DAS?

A: Debts that will not form part of your Debt Payment Programme include: Some secured loans Student loans Court fines

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What happens if I do not adhere to the Debt Payment Programme?

Q: What happens if I do not adhere to the Debt Payment Programme?

A: If you fail to make the required payments, the Debt Payment Programme may be revoked, leaving you exposed to the legal action of creditors who may backdate interest charges and fees.

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Am I likely to lose my home in sequestration?

Q: Am I likely to lose my home in sequestration?

A: It is possible that your home may need to be sold or remortgaged in order to raise money if you own part or all of it. This is not always the case, however, and much depends on whether the cost of raising money in this way makes it a viable option. This is a decision that only your Trustee can make.

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How does the Sequestration process start?

Q: How does the Sequestration process start?

A: You can either sequestrate yourself, or alternatively a creditor owed more than £3,000* can start the procedure. To enter sequestration yourself you need an approved money advisor to agree that you are in fact insolvent, and that other procedures are not more suited to your circumstances. Once this has been established, they will issue a Certificate of Sequestration which is valid for 30 days. This is sent to the Accountant in Bankruptcy, along with the application for sequestration and the fee of £200. For a creditor to start the sequestration process, they have to be owed more than £3,000*. They may already have sent you a Statutory Demand, and will lodge a petition for your sequestration with the court. If no single creditor is owed £3,000* they may get together to organise a joint petition. (*This figure is temporarily set at £10,000 following the Scottish Coronavirus Act).

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What is sequestration?

Q: What is sequestration?

A: Sequestration is a form of insolvency available to Scottish residents, whereby assets are transferred to the control of an appointed Trustee in order to pay off unsecured debts. It is very similar in nature to bankruptcy in the rest of the UK, and is seen as a measure of last resort to pay creditors and permanently write off debts. You can apply for sequestration yourself, or if one or more of your creditors are owed £3,000 or more they can apply to put you into sequestration in order to recover part or all of their debts.

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What type of debt is included in a sequestration?

Q: What type of debt is included in a sequestration?

A: Unsecured debt including credit cards, loans and overdrafts are included in sequestration, as well as arrears on household debts such as utility bills and council tax. Any debt secured on an asset is not included. Nor are student loans, Child Maintenance payments, fines or overpayment of benefits.

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How long does it take to set up a trust deed?

Q: How long does it take to set up a trust deed?

A: A Trust Deed can be setup very quickly. Once you have discussed your financial situation in full with an Advisor and taken time to consider that this is the most appropriate option taking all factors into account. The Trust Deed document and accompanying paperwork can be signed which then gives the Trustee the relevant powers to act on your behalf. The Trustee will make contact with all your creditors and from that point you can stop making payments to the individual creditors and pass all correspondence for the Trustee to deal with. Thus relieving you from the pressure instantaneously.

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What would the consequences be if I missed a trust deed payment despite my circumstances clearly changing?

Q: What would the consequences be if I missed a trust deed payment despite my circumstances clearly changing?

A: The Trustee will write to you every six months throughout the period of your Trust Deed to monitor and assess your Financial Position and your ability to maintain the contribution at the current level. In addition to this the Trustee will explain at the outset of the Trust Deed that should you have any change in circumstance which will affect your ability to make a contribution you must update him with immediate effect. If you have a change in circumstance and notify the Trustee of this providing evidence to substantiate your change in circumstance. The Trustee will take all factors into account before making a decision as to whether to reduce, suspend, stop or infact increase your contribution. It may be depending on the circumstance that your Trust Deed period is extended or shortened or that you are able to suspend the payments until such time as your Income position improves.

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What are the set-up costs of a Trust Deed?

Q: What are the set-up costs of a Trust Deed?

A: There are no initial setup or additional hidden costs in a trust deed. The Trustee’s fee’s and outlays for administering your trust deed are met from the contributions you pay in on a monthly basis or/and from the assets which may have to be realised in your Trust Deed. The Trustee is paid prior to making a distribution to your creditors. The Trustee’s fees are broken down into three categories, fixed fee, percentage of realisations and costs and expenses associated with the Trust Deed.

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What does a protected trust deed mean?

Q: What does a protected trust deed mean?

A: A protected Trust Deed is binding on your creditors. It means that if you comply with the terms of your trust deed then the creditors cannot take any further action against you to recover any debts you might be due to them. They cannot arrest your earnings or petition for your sequestration whilst you are subject to a Protected Trust Deed. Unlike an ordinary Trust Deed which is not binding on your creditors. If when presented with your Trust Deed Proposals more than half in number or one third in value of creditors object to your Trust Deed then it will fail to reach protected status.

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How does entering a Trust Deed affect your credit rating?

Q: How does entering a Trust Deed affect your credit rating?

A: Yes, although a Trust Deed is not a court process the creditors you have made defaults with are likely to notify the credit reference agencies that you have missed payments. There will be an entry on the Register of Insolvencies that you are subject to a Trust Deed.

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Do I have to get my creditors to agree to my trust deed?

Q: Do I have to get my creditors to agree to my trust deed?

A: Applying for a trust deed has been on my mind for some time but I’m concerned that all creditors may not agree to my trust deed? What if one of them doesn’t agree?

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Will all my debts be covered by the terms of a Trust Deed?

Q: Will all my debts be covered by the terms of a Trust Deed?

A: I am a single mother of two children with a number of debts and loans, including some spiralling payday loans that are stressing me out. I have looked into debt management plans and trust deeds and it seems as though the trust deed is the best option but I’m not sure whether I can consolidate all my debts into one monthly payment? Can loans be included in this?

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What happens to my car in sequestration?

Q: What happens to my car in sequestration?

A: If you own a car worth more than £3,000, or you have no real need for a vehicle, it may need to be sold to raise money for your creditors. Alternatively, your Trustee may ask you to sell it and buy a cheaper one so that you can put the difference to paying off your debts. If a vehicle is needed to get to work, however, selling it may not be the best option and you may be allowed to keep it.

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Are any outstanding debts written off?

Q: Are any outstanding debts written off?

A: Under the Debt Arrangement Scheme, all debts included in the Debt Payment Programme will need to be repaid, minus interest and charges. The idea is that several debts are consolidated into one affordable monthly payment that continues until all creditors are repaid.

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Our Insolvency Practitioners are regulated by ICAS or the IPA and our firm is authorised and regulated by the Financial Conduct Authority

Fees and Information: There are fees associated with our services. These will be fully explained before entering into any of the personal debt solutions referred to on this website. Full details of our fees and how these are charged are fully explained to you prior to you committing to any particular service.

ICAS Insolvency Practitioners
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