If you live in Scotland and are experiencing financial difficulties at the moment, it can be useful to familiarise yourself with the various debt solutions available so you know where to turn if you do need help and guidance to get yourself free from debt.
Those of you looking for help with debt in Scotland right now may want to consider the Debt Arrangement Scheme as a potential avenue to financial freedom.
This is run by the Scottish government (1) and helps people to repay their debts in a manageable way without them having to worry about the threat of court action from their creditors.
When you sign up to this scheme, you make one regular payment into your debt payment programme, with the money then divided up and sent out to your creditors.
You are able to apply for this programme with any amount of debt behind you and you can also apply for it alongside your spouse, civil partner or your cohabiting partner if you’re both liable for at least one of the debts.
If you are interested in going down this route, you will need to get in touch with a professional debt adviser, as they will need to make the application on your behalf.
This may be an appropriate course of action for you if you have sufficient funds to make regular payments and if you don’t want to sell your home to settle your debts. It may also be a good option if your job is likely to be affected by other debt solutions, such as bankruptcy or protected trust deeds.
Advantages of this kind of debt solution include not having to sell assets to pay off your debts, no more enforcement action from creditors and suspended interest and debt charges.
However, there are some disadvantages to be aware of as well, including the fact that you may have to pay regular contributions for a long time in order to repay the full amount of what is owed.
Your credit rating can also be affected for as long as you’re in the debt payment programme, which can make it harder to get a mortgage and access other credit in the future. Your home could also be put at risk if you have mortgage or rent arrears and you enter into this kind of programme.
Alternatives to this particular debt solution include bankruptcy, which is known as Sequestration in Scotland. This could be an appropriate course to take if you are no longer able to repay your debts as they fall. You can apply for bankruptcy if your debts come to £1,500 or more.
Protected trust deeds are another option, where your assets and property are transferred to a trustee who then manages everything on your behalf. Here, you pay contributions towards your debts for four years. This route is only suitable for those with debts of £5,000 or more.
If you are struggling with debt at the moment because of cost of living challenges, get in touch with us today to see how we can help.
References:
1. https://www.aib.gov.uk/debt-arrangement-scheme
