If you are concerned about your personal finances, you have found a great source of debt management advice in Scotland which will help you to consider your options. Trust-Deed.co.uk brings together the expertise of a variety of skilled debt professionals, who can help you work out how to best deal with your debts.
Around this site you’ll find pages which describe each of the major debt solutions that are open to residents of Scotland. These alternatives extend far beyond the well-known ‘debt management plan’ and in many cases will be more effective when dealing with debts.
You can also visit our Scottish debt forum. In this forum you’ll find experts from respected firms that specialise in all types of debt management in Scotland, including protected trust deeds, bankruptcy (sequestration) and the formal debt arrangement scheme. The site advice team also provides visitors with access to a team of three professionally qualified debt advisers, who you can contact directly to answer questions and offer expert advice.
Why ‘Debt Management’ is a confusing term
‘Debt management Scotland’ is a term that can leave people confused. It may refer to a number of different factors and is just one of the options carefully explained on our advice forum.
Most commonly it refers to an informal debt management plan. A debt management plan (also known as debt management or a DMP) is the most widely used debt solution in the UK. If you’re in a DMP, or thinking about starting one, keep reading! It’s highly likely a better and safer option is available to you.
Increasingly debt management is also being seen as a reference to the formal Debt Arrangement Scheme in Scotland. This option works in a similar way to an informal DMP, but for most Scottish residents it’s safer, more certain, cheaper, and may well free you from your debt more quickly. Not a bad list of advantages!
The term is also sometimes used to generally describe personal debt solutions in Scotland collectively. The scope of these options extends to Scottish trust deeds and sequestration, as well as the others which have been mentioned.
Informal Debt Management Plans
Hundreds of thousands of people around the UK are currently making use of a debt management plan. They’re popular because they’re easy to set-up and are provided for free by some organisations. They are also a common form of Scotland debt management because they are less formal than insolvency and only require one simple, affordable payment to be made each month.
However, a DMP also has some fundamental flaws. Our Scottish debt forum helps members of the public to understand these flaws. Firstly, it’s not backed by government legislation, so your creditors don’t have to accept it. They can still take legal action against you or your home (if you are a homeowner). They don’t have to freeze or reduce interest charges, and, some may carry on applying other charges. As interest and charges may be added, you cannot know for sure when your debt management plan will end.
Are these risks and problems that you just have to accept? If you live in England, Wales or Northern Ireland, perhaps this is true. As all good providers of debt management advice will know, if you’re a resident of Scotland it’s definitely not true. You have at least one more option that will provide improved protection, certainty and security.
What if you’re already in a DMP? It doesn’t matter; you can leave at any point and switch to a more appropriate solution. If you receive any other advice, you should certainly look for a better source of advice elsewhere.
The Debt Arrangement Scheme
The Debt Arrangement Scheme is a highly effective debt management option in Scotland. In many ways it works like an informal debt management plan, but provides extra protection and certainty (though for a very small minority of people the very informality and flexibility of a DMP might have advantages).
Let’s start with the similarities. In both debt management options, you pay an amount you can reasonably afford each month towards your debts, in one single payment, to an organisation which will help you to deal with your creditors. Only your spare income is being used; assets (like your home or car) are not specifically included in a DMP or the Debt Arrangement Scheme.
What about the differences. Credible sources of debt advice will fully inform you of the pros and cons. Once it’s up and running, your creditors are bound by a Debt Arrangement Scheme. In a DMP they can change their minds. A DAS also prevents your creditors from taking legal action against you; a debt management plan does not. Of the two options, only the Debt Arrangement Scheme guarantees that interest and charges will stop (provided that you keep your side of the bargain). In a debt management plan, interest could still be added; in some terrible cases we’ve heard of on our debt advice forum, the level of debt can actually grow.
What other options exist?
Debt management plans and the debt arrangement scheme are ‘rescheduling’ options. They reschedule what you have to pay back over an affordable period of time. You still have to repay your full debts. For some people, this might take an unreasonable amount of time or be simply impossible. If so, discuss your options with a credible source of Scotland debt management advice.
That’s where ‘restructuring’ options come in. These types of debt solutions can result in some or all of your debts being written off.
A protected trust deed is one popular method of ‘restructuring’ debts to deal with a relatively serious debt problem. Usually payments are made for three years with any remaining debts being written off. Certain assets might be taken into account as well.
Sequestration (bankruptcy) is another method of restructuring your finances. Payments (if affordable) will need to be made for three years and certain assets might be taken into account as well. Any good provider debt advice will ensure you thoroughly understand the implications, both positive and negative, of all the solutions available.
There is a wealth of information about all of these options at Trust-Deed.co.uk.
Finding a good source of advice
You may wish to read our ‘Debt Advice Scotland’ page for further information about the best sources of advice (and details of which sources of advice to avoid!).
There are a number of resources on this website that may help you to get started. Guides about protected trust deeds, sequestration and the debt arrangement scheme each provide further detail about how these options work, who they might benefit, and also about some of the potential drawbacks that exist.
You may also wish to visit our debt advice forum. You can read debt management Scotland questions that have been asked by more than 2,000 Trust-Deed.co.uk members and the answers provided by our panel of experienced and professional experts. If you have a question then our Scotland debt management forum is an excellent place to ask it, as it dispenses high-quality advice. The shared experiences of other members who have experienced debt issues are also likely to be a valuable source of information and reassurance.
Our Scottish debt forum and subject experts are backed up by three professionally qualified advisers in the Trust-Deed.co.uk advice team. If you wish to get in touch, they’re available on our debt advice line, via the contact forms on the site or by posting a question on the Scottish debt forum.
Quick Reply Form
Provide us with your contact details. A qualified debt adviser will contact you ASAP.
Data never passed to other organisations.