If you’re struggling, free debt help is available. National Debtline is a charity that has been helping people for over 30 years. Advice from our professional advisers is always free. We can help you find your best solution.
Scottish debt solutions include:
- agreeing reduced payments yourself;
- debt management plans;
- a debt arrangement scheme;
- protected trust deeds; and
- sequestration (also known as bankruptcy).
We’ll tell you more about these and other debt solutions in this article.
Where can you get debt advice in Scotland?
Free help and advice about dealing with your debts is available if you live in Scotland.
- National Debtline provide free advice over the phone and by webchat. We also have lots of useful guides covering all kinds of topics in detail.
- You may be able to get free, confidential and impartial advice from your local Citizens Advice Bureau.
- There may be other local services that can help, see the Money Advice Scotland website.
Signs you may need debt advice
It is never too late to get advice, but it is best to seek help straightaway if you are worried about your debts. Signs that you need help include:
- not being sure if you can pay all of your bills on time;
- borrowing money to pay for regular costs like food or clothing; or
- missing payments for debts or essential bills like your mortgage or rent.
What debt solutions are available in Scotland?
Scottish debt advice is not the same as English, Northern Irish, or Welsh advice. There are several Scottish debt solutions that are not available in the rest of the UK. We’ll explain about these in this article. For an overview of all the solutions that you might be able to consider, see our Ways to clear your debt guide.
Debt Arrangement Scheme (DAS) explained
A DAS allows you to repay your debts at an affordable rate. You apply for a DAS with the help of an approved money adviser. They make the application for you. You make an affordable monthly payment to the DAS, which a payment distributor shares between your creditors. In most cases, the DAS stops creditors from taking further action against you.
- The DAS is a Scottish Government-backed debt management scheme.
- You need to have money available to pay your debts or assets that you can use to make payments to the DAS.
- You may be able to change your payments if your circumstances change.
- The DAS will not affect your assets; you won’t have to sell your home or car.
- A DAS usually aims to pay your debts in full. This may take some time.
- Interest and charges are frozen.
To find out more about a DAS, see our Debt Arrangement Scheme guide.
Protected trust deeds explained
You can only apply for a trust deed with the help of an insolvency practitioner. A trust deed is a voluntary agreement between you and your creditors to repay what you owe them. It can be based on monthly payments, a lump sum payment or both. You pay back an amount set by the trust deed for a set amount of time. When your trust deed ends, any remaining debts included in the trust deed are written off.
- A trust deed will usually last for 4 years.
- You need to have money available to pay your debts, or assets that you can use to make payments to the trust deed.
- You cannot have a trust deed if your income is only from benefits.
- If things improve, for example your income increases, you may have to pay back more than you originally agreed. Any non-essential assets that you own will be included in the deed and could be sold (including your home).
- Your creditors are given a chance to stop your trust deed from becoming protected. The deed can still become protected if only some object. This depends on how many object and how much money is owed to the creditors that object.
- Unless you have a protected trust deed, creditors that don’t agree to the trust deed can still ask you to pay in full.
To find out more about protected trust deeds, see our Trust deeds guide.
Sequestration (bankruptcy in Scotland)
There are two different kinds of bankruptcy in Scotland.
Minimal asset process (MAP) bankruptcy
You can apply online for MAP bankruptcy with the help of an approved money adviser. A trustee is appointed to deal with your bankruptcy. They will contact your creditors and ask you for information about your circumstances. Bankruptcy stops most creditors from taking further action against you. Most types of debts will be included and written off.
MAP bankruptcy is only available if you have a low level of debt and very few assets.
- You cannot own any land or buildings.
- Your total assets cannot be worth more than £2,000.
- Any single asset that you own cannot be worth more than £1,000. Although, if you own a car worth no more than £3,000 that you reasonably need, it will not be counted.
- Your budget must show that you have no money available to pay towards your debts, or that your income for the last six months has been from benefits only.
- MAP bankruptcy offers you a fresh start.
To find out more about MAP bankruptcy, see our Bankruptcy guide.
Full administration bankruptcy
You can apply online for bankruptcy with the help of an approved money adviser. A trustee is appointed to deal with your bankruptcy. They will contact your creditors and ask you for information about your circumstances. Bankruptcy stops most creditors from taking further action against you. Most types of debt will be included and written off.
- You must owe at least £3,000.
- You do not need to have money available to pay your debts to go bankrupt. If you own assets, they may be sold to pay towards your debts. This could include your home.
- Unless your only income is from benefits, you may be asked to pay an amount towards your debts for four years. Your trustee will decide how much you can afford to pay towards your debts.
- Bankruptcy offers you a fresh start.
To find out more about full administration bankruptcy, see our Bankruptcy guide.
Other ways to deal with debt in Scotland
There are other ways to deal with your debts that you could look at. To find out more about how these work, and their pros and cons, see our Ways to clear your debt guide.
Here are some of the other Scottish debt solutions you could consider.
Self-negotiation – you could negotiate smaller payments to your creditors based on what you can afford to pay. National Debtline can give you free advice about how to do this and have sample letters that you can use.
Debt management plan (DMP) – this is similar to self-negotiation, but you make one monthly payment to a company and they negotiate smaller payments for you. We only recommend using companies that provide a free service. It will usually be better to use the debt arrangement scheme (DAS) instead of having a DMP. A DAS gives you legal protections and guarantees on freezing of extra charges that you do not get with a DMP.
Debt consolidation loan – this means taking out a new loan to pay off your current debts. We usually only recommend doing this if you can afford your current payments. Your debt will increase at first, because you will owe interest on top of the money you have borrowed. Think carefully before you agree to any secured lending, as this can put your home at risk.
Debt consolidation: what to think about before you borrow guide
Full and final settlement -If you have a lump sum of money, you can ask your creditors if they will accept a part-payment of the debt and write off the rest. Your creditors do not have to agree to this. If creditors do agree, always get it confirmed in writing before you make the payment.
Full and final settlement offers guide
How to choose the right debt solution
The first step to finding your best solution is to complete a budget. Writing down your income and outgoings might feel like the last thing you want to do. But it may be easier than you think. You won’t be able to choose a solution to deal with your debts without a budget. Call National Debtline to get a free budget sheet you can use.
Once you have finished your budget, an adviser can help find your best solution. This will depend on lots of things including:
- how much money you have left over after paying your living expenses (if any);
- whether you own any assets, and if so, how much they are worth; and
- whether you are expecting any change in circumstances.
Don’t be tempted to choose a debt solution just because you have seen it advertised. Always get free independent advice first.
Get free debt advice today
If you feel like you’re struggling, get advice today. You can call National Debtline on 0808 808 4000. Get free professional help to deal with your debts.
