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According to various charity and news reports, growing numbers of people in Scotland are struggling with debts but what options are available to resolve them?

The situation is different in Scotland because there are different routes to deal with debt then elsewhere in the UK.

For those who have some money to repay debt it is important that you deal with urgent debt first, these are the ones where the consequences of not paying can be serious such as losing your home for not paying the rent.

Also, for people living in Scotland you could approach creditors to see if you could pay less; or ask a debt management company to approach your creditors or consider loan consolidation so your debts are dealt with under one loan.

There’s also the option of a debt arrangement scheme, a trust deed or sequestration (bankruptcy). These are explained in more detail below.

There are advantages and disadvantages to each of these routes so you should get as much as information as possible before making a decision and do not sign anything until you know you are taking the best option.

Debt arrangement scheme

Set-up by the Scottish government, the debt arrangement scheme helps Scots manage their debts.

Under the scheme, you make a regular payment to your payment distributor who then sends portions of the money to your creditors. While you can apply directly for the debt arrangement scheme and approved money adviser can make an application for you.

The debt arrangement scheme is a popular choice because you will repay everything that you owe but at a much lower rate and over a longer period of time to help free-up money so you are not stressed about your debt situation.

Scottish trust deed

A trust deed is a legally binding agreement between yourself and your creditors with your assets, including property, being passed to a trustee to manage your financial affairs.

The aim of a trust deed is to pay those you owe money to as much as possible and your creditors cannot take action against you while a trust deed is in place.

You’ll need to have at least £5,000 worth of debt and should make regular payments for paying the debt which will be for at least four years.

The big attraction for a trust deed is that after four years you will have met your obligations and be discharged from it. The amount of debt that remains at this point will then be written off.

Sequestration

In Scotland there is also the option of sequestration, better known as bankruptcy, which is for those who have no money to pay debts or so little income that it will take many years to repay everything they owe.

You can apply for sequestration or your creditors may choose to sequestrate you. There are several routes to bankruptcy and you should take advice before pursuing this route.

Help and advice about a trust deed, a debt arrangement scheme or sequestration

For more help and advice about a trust deed, a debt arrangement scheme or sequestration then there’s a team of experienced and friendly debt advisers at Scotland’s Trust Deed who are available to give impartial advice.

This means that the advice they give you does not have to be followed but they will help you understand the options that are available and arrange for these on your behalf.