Debt Advice and Money Advice
Unfortunately debt problems are becoming a feature for many people in today's society.
Most debts are well managed over a period of time. However, sometimes personal circumstances can change which cause debt to become a problem. If you are in this position, there are several options available and the main ones are:
- Debt Arrangement Scheme
- Trust Deed
Debt Arrangement Scheme ("DAS")
Under a DAS, you sign up to a debt payment plan (DPP) which allows you to repay your debts based on how much you can afford. A DPP can last for any reasonable length of time - but it may not be in your best interest to sign up for a very long time. A protected trust deed (PTD) or sequestration might be better options for you as they do not last so long.
Your creditors will receive regular payments from your DPP towards the debts owed to them. When your DPP is approved, all interest, fees, penalties or other charges owed are frozen. You are also protected from your creditors taking any action against you to recover their debts.
You have to go through an approved money advisor such as ourselves, and we send the proposals to your creditors who have three weeks to object. If they don't object they are obliged to accept the plan. If your creditors are threatening legal action the registration of a DPP gives six weeks protection whilst proposals are prepared and hopefully approved.
So don't worry about debt. Act now and find out if you can have time to pay in a DAS, or if the write off of your debt through a trust deed or sequestration might be best suited to your needs. Phone Scottish Debt Advice on 0800 881 8709 for free telephone advice, or if appropriate a meeting to discuss your personal financial situation
Sequestration (Scottish for bankruptcy)
Sequestration is a formal method of dealing with debts if other options have failed or are inappropriate. The consequences of bankruptcy can be severe and the process starts when someone in debt (a debtor) is declared bankrupt by the sheriff or the Accountant in Bankruptcy. If you are declared bankrupt, it means you have to hand over your valuable property (including your home) to your trustee. The trustee administers the bankruptcy and he is either an Insolvency Practitioner such as us or a civil servant called the Accountant in Bankruptcy. You are able to keep some things that are essential for everyday living. However you may be required to make payments from your income - for up to four years. It is the duty of the trustee to sell your valuables and to use the money to:
- pay the costs of managing the sequestration; and
- pay creditors as much as possible of what the debtor owes them.
The creditors are the people or organisations that are owed money by the debtor. Subject to certain conditions, a creditor can apply to a sheriff to make a debtor bankrupt. As a debtor, you can apply to make yourself bankrupt and either the Court or the Accountant in Bankruptcy will decide if you meet the conditions.
Sequestration is not an easy option and you should always take advice before applying. For at least 6 months, a bankrupt commits a crime if he borrows money or buys goods on credit without saying he is bankrupt, and you can't normally be a company director. You may have problems at work if you are in certain occupations, and your credit rating will be affected for six years.
A Protected Trust Deed ("PTD")
A Trust Deed is a real alternative to Sequestration and could be your best solution if you have a substantial amount of unsecured debt. It acts as a legally binding agreement between you and your creditors and can only be set up by a licensed Insolvency Practitioner such as us.
Features of a Trust Deed
- The unpaid balance of your debts is written off.
- One affordable monthly payment - usually for four years.
- Protects you from further action by your creditors.
- Your creditors are legally bound by the terms of the agreement.
- No uncertainty: you know how much you pay and for how long.
- Can be used to prevent Bankruptcy proceedings against you.
- Real alternative to declaring yourself Bankrupt.
- "Acquirenda" - things you acquire duing the four years - automatically go to the trustee.
- No public notices: a Trust Deed is a private arrangement between you and your creditors.
The period of contributions in a sequestration is now extended to four years - the same as in a trust deed. For many people, that now makes a PTD the more attractive option.
We can advise you on the best option for you. Call us for free confidential money advice. The call is free. The number is 0800 881 8709.
"E.L. had debts of £56,000 including substantial amounts owed to his family. He had been working overseas and was not aware of the debts being built up in his business, which was being run by his wife. Bankruptcy was the option recommended by CS Corporate Solutions. E.L. is paying £200 per month, which is all he can afford from his salary, but after three years – having paid only £7,200 – he was be debt free."