Scots increasingly clearing debts
While there are still big issues with the number of Scots struggling with debts, official figures show more of us are using pay rises to clear debt.
Also, more Scots are able to save after wages grew last year, Scottish government figures reveal.
However, there’s not been a rise in consumer spending which means Scots are either saving or clearing debts, financial experts say.
The figures also show that many people in Scotland are having to borrow cash to sustain their spending levels so are falling further in debt.
The figures cover the first quarter of 2019 and for those who live in Scotland and want to become debt free, there are several routes to enjoy this.
Debt advisers at Scotland’s Trust Deed
The first step is to speak with the experienced debt advisers at Scotland’s Trust Deed who can discuss the potential routes to clearing debts. They include:
- A trust deed
- Sequestration (or bankruptcy)
- A debt arrangement scheme
All of these have various criteria and not everyone will qualify for a Scottish trust deed.
Under a trust deed, someone who is in debt in Scotland can write off their unaffordable debt after making repayments over 48 months.
Essentially, they will be paying back what they can afford and the amount that remains is then written off.
For those who own their home, this is a way of keeping their property though equity release may be necessary.
Scottish trust deed
A Scottish trust deed works along similar lines but there is no debt to be written off since the entire amount owed is repaid over a period of time.
For those who want to write off their debts, then sequestration is an opportunity for doing this but it needs careful thought because the ramifications can be serious.
There’s a lot to consider when dealing with debt and the experts at Scotland’s Trust Deed can help and also offer advice on:
- Debt consolidation
- Debt management plans
- Informal negotiations
- Full and final settlement
- Remortgaging and equity release.
For more help and advice for any Scot interested in clearing their debts, then it’s time to contact the experts at Scotland’s Trust Deed.
Why people in Scotland are struggling with debts
Citizens of the city of Dundee have the highest levels of personal debt in Scotland according to the latest research results.
£20,000 is the staggering amount of the average debt – that’s an astonishing amount of money and it is easy to see why people are struggling and becoming desperate.
Financial experts are blaming the heavily criticised Universal Credit System and the low amount of wages in the city.
In comparison, the average personal debt for the rest of Scotland is £17,600. That’s still a worrying amount. The figures have been released by Creditfix, a personal insolvency company.
Scotland’s Trust Deed see the repercussions of debt
Scotland’s Trust Deed regularly see the repercussions of this level of debt and we are adept at helping our customers get themselves back onto a strong financial footing.
The summer holidays can often be a time when families find themselves getting into even more debt. Six weeks without access to free school meals and the pressure to entertain the children and ‘make memories’ forces cash-strapped parents to turn to credit cards to get by.
To counter the alarming level of debt in Dundee, one charity has introduced a service for the people who are in financial hardship.
The operations head has reported that between December and June last year, the increase in the average amount of their customer’s personal debt had risen to over £1,000.
Increase in debt
So, who and what is to blame for the increase in debt over those six months?
- The cost of Christmas (another source of pressure for families)
- Universal Credit and all the issues that it has created
- A rise in the cost of living
- Consistently low incomes.
Scotland’s Trust Deed recently published a blog about the 47% of people who are in work but who run out of money by the end of the month at least once a year.
In the same survey that we quoted in that blog found that 25% of Scottish people are finding it increasingly difficult to survive on their existing pay packet.
Sadly, in the current climate these trends are likely to continue which is why Scotland’s Trust Deed strongly advises against turning to pay day loans or high interest credit cards to manage the shortfall.
Universal Credit is proving to be a challenge to the people who have been placed into the system and if you find yourself in a position where you are no longer able to manage financially due to Universal Credit, contact your local Jobcentre Plus. They have measures in place to support people who are being forced to wait too long for their first payment.
Help and advice about debt in Scotland
For more help and advice about debt in Scotland and ways to resolve it then contact the friendly debt advisers at Scotland’s Trust Deed.
How to write off unaffordable debts with a Scottish trust deed
A Scottish trust deed will be taken out for one of many reasons – and the debt advisers at Scotland’s Trust Deed have heard most of them. The main reasons are:
- The avoidance of sequestration (bankruptcy) as it is seen by many as the very last resort. It is the most punitive and restrictive of all the debt management options for those in debt in Scotland.
- Creditors are increasing the pressure and the stress is rising. Scotland’s Trust Deed would advise everyone who is finding themselves struggling with debt to speak up and ask for help as soon as possible.
- It is a useful way of tackling disrupted finances and write off debt. This is the best of the reasons as it shows a sensible and reasoned approach to a situation that has not yet reached desperation levels.
So why would you need a Trust Deed to help you with your debt?
- Some of the less reputable creditors can be unkind especially when they encounter people who are looking to write off large amounts of debt. Taking on the negotiations yourself should be considered very carefully.
- The negotiations process can be lengthy and will not necessarily end in success. Often it is only a proportion of the amount requested that gets written off. It is not unusual for the request to be refused and negotiations ended with no reduction in your debt at all.
- A big stack of cash may be needed for the ‘full and final settlement’ amount.
How can using Scotland’s Trust Deed help you?
Scotland’s Trust Deed will employ a trained Insolvency Practitioner (IP) to negotiate with your creditors for you. They have the skills that are vital to securing a payment plan and an agreement to the appropriate amount of debt being written off.
Creditors will treat an IP with much more respect than a member of the public. The big lenders will have developed working relationships with certain IPs over the years. There is a mutual understanding between them.
With a professional IP involved, a creditor is also likely to recognise the severity of your debt situation and your determination to get the matter resolved. It will be clear that you intend to pay some money back and are not just ‘taking the easy way out’.
In comparison to people who enter negotiations themselves, a Scotland’s Trust Deed customer is much more likely to have their debt written off at the end of the deed’s term.
If you think that Scotland’s Trust Deed might be able to help you manage your debts, then get in touch and one of our friendly, knowledgeable debt advisers will be happy to assist.
Sequestration – what you need to know
Scotland’s Trust Deed offers advice on several debt management options which includes Sequestration or bankruptcy as most people know it. If you decide to take this step towards financial freedom, then we will support you throughout the process.
However, very careful thought needs to be given to sequestration or bankruptcy process, particularly the implications for doing so.
Do you qualify for sequestration?
Sequestration is for people who have the most serious financial issues, a high amount of debt combined with a limited ability to pay it back.
- You must live in Scotland or own a business here.
- Your debt must be over £3,000.
- Insolvency must have been declared. This is where it is decided you cannot pay your debts when they are due.
- A previous sequestration must not have occurred in the previous five years.
A step by step guide to Sequestration
There are two types of sequestration
- Minimal Asset Process (MAP) which is for people with low income and few assets
- Standard sequestration for people who own a home or business.
Your adviser at Scotland’s Trust Deed will work closely with you on the sequestration process.
If you qualify for sequestration, your adviser will give you a certificate of sequestration and it will be valid for 30 days.
The application form and certificate will both be sent to the Accountant in Bankruptcy (AiB). They will approve or dismiss it and you will usually know within five days.
Once approved, your creditors will no longer be permitted to contact you.
Application for sequestration
Once the application for sequestration has been given the green light, a trustee will gain control of your assets. The trustee may sell the assets and the money raised will be shared out equally between your creditors.
Sequestration usually lasts 12 months – after that, you will be discharged. However, you must still communicate with and act on the advice of your trustee after discharge. Depending on your circumstances, your assets may continue to be sold after the 12 months.
After sequestration, your remaining debts will be written off and the creditors will not be allowed to contact you.
The disadvantages of sequestration
Your sequestered status will be available to the public via the online register.
Your credit file will be damaged for six years and it will be hard to get credit for mortgages, phone contracts and credit cards.
Any company directorships must end during the period of sequestration. It may also have an impact on your current and future career. Scotland’s Trust Deed advise checking your employment contract before applying for sequestration, especially if you work in the financial industry.
You may lose your assets such as your home and car which could be sold to pay your creditors. For many owners of property going ahead with sequestration is the absolute last resort.
Contact Scotland’s Trust Deed to discuss with our expert team of debt advisors whether sequestration is the right decision for you.
Call to extend ‘debt breathing space’
The team at Scotland’s Trust Deed know that a spiralling debt is often caused by panic and pressure from creditors. The stress of a catalogue company or credit card ringing you several times a day threatening legal action can lead to bad decisions, extra loans and an exacerbation of the problem.
The UK Treasury recently declared a scheme that gives people in debt ‘Breathing Space’ of 60 days. During that time creditors must freeze interest and cease aggressive chasing tactics while the individual seeks advice on how to deal with their financial crisis.
The new project is only available in England and Wales though it is very like one that has existed in Scotland since 2015. There is one disparity which the Citizens Advice Bureau in Scotland has called for an end to.
In the Scottish ‘Moratorium’ Scheme, debtors have only 42 days to sort out their problems and this is unfair, the charity says. A spokesman said that their advisers are dealing with debt cases every day and ‘We welcome this scheme and we want to see its protections being extended to the people of Scotland.’
Debt struggles can lead to depression
For many people in Scotland, debt struggles can lead to depression and anxiety or make an existing mental health conditions worse. Breathing Space acknowledges this and allows those suffering to have extra time and an increased level of support.
A Scottish Moratorium has no such provision for mental health issues and this is also something CAS is keen to rectify.
How will the ‘Breathing Space’ scheme work?
- It will come into force from 2021
- People with financial problems will be safe from the enforcement action of creditors
- Interest on debts will be halted for the 60 days
- Debtors will mental health issues will be entitled to further help while they are receiving treatment
- The range of debts the scheme will cover is extensive
- People on the scheme will need to actively communicate with expert debt advisors in order to get back on the road to financial security.
Speaking with a friendly and experienced debt advisor
This last point is really important since speaking with a friendly and experienced debt advisor offering impartial advice can be inspirational.
The new scheme may yet be taken up in Scotland, in which case Scots who are struggling financially could see the period of 60 days being free of the threat of legal action, bailiffs, fines, interest and constant hounding being of huge help. It’s this breathing space that could allow debtors in Scotland to:
- Categorise their debts into priority and non-priority
- Seek advice from experts
- Apply for Debt Management Schemes and Trust Deeds
- Avoid applications for payday loans and expensive credit cards
- Seek extra work or hours
Potential debt solutions
There is a lot to recommend the introduction of a 60-day period as a perfect time to call the team at Scotland’s Trust Deed for help and advice. If you live in Scotland and are struggling financially, then contact us to learn more about a Scottish trust deed, a debt arrangement scheme or sequestration, among other potential debt solutions.