Debt is an issue which affects a large number of people in Scotland. One of the issues facing those struggling with debt is uncertainty about what their options are, and what steps they should take to deal with their debt.
There are several possibilities for anyone in debt, and choosing the right path for you will depend on your individual circumstances. It is important to understand that not all debts are equal. If you have some money which you can put towards paying off your debts you need to start with your priority debts. Priority debts include:
- Council taxher debts including overdrafts, personal loans, and benefit overpayments are considered non-priority debts, these should only be considered once your priority debts have been dealt with.
Debt Management Plan
If you can repay your priority debts then a debt management plan may be a good solution. This is an informal arrangement between you and your creditors to make regular payments towards your debts.
The Debt Arrangement Scheme (DAS)
The DAS has been set up by the Scottish government to assist people who need help to repay their debts. Under the scheme debtors agree a debt payment programme with their creditors and then make one regular payment to a payment distributor who splits the money between the creditors.
A Trust Deed
A Trust Deed is a very common way of dealing with debt. A trust deed is a legally binding agreement made between the debtor and the creditors. All of the debtors assets are passed to a trustee to manage on behalf of the debtor. Once the Trust Deed becomes protected in law it is not possible for your creditors to take any legal action against you, or to force you to become bankrupt, you can use the calculator at trust deed Scotland to see if you qualify.
You trustee will manage your financial affairs to repay as much as possible of your debt to your creditors. You must have a minimum of £5,000 of debt before a Trust Deed can be set up.
Under a Trust Deed you will make regular payment towards your debts for a period of four years, as long as you make those payments throughout the time of the trust deed any remaining debt at the end of the four year period will be written off.
Trust Deeds have several advantages over other ways of dealing with debt. They are an alternative to bankruptcy, and enable debtors to rebuild their lives sooner than they would if they were subject to bankruptcy.
Trust Deeds are a good solution for those for whom the DAS or a Debt Management Plan would not be appropriate. If you are in serious financial difficulties and unable to repay your debts then talk to a financial advisor today and see if a trust deed would be appropriate in your situation.