If you live in Scotland and are struggling with your finances, then the debt arrangement scheme may offer a potential solution.
The Scottish debt arrangement scheme has been created by the Scottish government to help people struggling financially to repay their debts in a manageable way.
The big attraction is that they will stop being hassled by their creditors, that’s the people they owe money to.
Under a debt arrangement scheme, you simply make one payment regularly, and it’s this that is divided up and sent to creditors.
The other big attraction for the scheme is that someone can apply to take part with any amount of debt.
Scheme is similar to a Scottish trust deed
While the scheme is similar to a Scottish trust deed, there needs to be a minimum of £5,000 of debt before the deed can be applied for.
Also, you can apply for the debt arrangement scheme with a partner or spouse if you are both liable for at least one joint debt.
As part of the scheme, an applicant will get advice from a money adviser and they will need to make the application on your behalf.
It’s here that the helpful team of debt advisers at Scotland’s Trust Deed really come into their own and they offer impartial help and advice; this means that you don’t have to act upon their recommendations.
Debt arrangement scheme
However, for those interested in the debt arrangement scheme then there are some criteria that may help, one of which is that you have enough money left after paying your important bills to repay debts over a reasonable period of time.
Also, if you are a homeowner and don’t want to sell your home, despite having lots of equity, then you may not have to do this. Under a protected trust deed, and also for bankruptcy, you may have to sell your property to release the equity to repay creditors.
Another issue is that someone in Scotland could be affected by using another debt solution option, for example, bankruptcy or a protected trust deed as this may affect their employment.
One of the problems for someone working in the financial sector, for example, is that they could lose their job if they are declared bankrupt.
Along with not having creditors pursue you for repayment, the debt arrangement scheme will also stop debt charges and interest being added to the debt.
Sign up to a debt payment programme
It’s also important that your credit to understand that your credit rating will be affected when you sign up to a debt payment programme under the scheme, so you may find it more difficult to access a loan or mortgage in future.
Also, your access to credit will be restricted and you may be allowed to borrow a limited amount under the scheme, if at all.
As mentioned earlier, one of the big attractions for the scheme is that someone struggling financially will get a period of time to repay what they owe. While this is defined as a reasonable time, the actual length of time is not defined.
That’s because the Accountant in Bankruptcy will decide whether the length of time being proposed for repayment is ‘reasonable’.
Essentially, if it would take more than 10 years to repay your creditors, then it’s unlikely that the scheme will be approved.
The Scottish debt arrangement scheme will help many Scots struggling financially
There is no doubt that the Scottish debt arrangement scheme will help many Scots struggling financially, but there’s also the option of a Scottish trust deed and also bankruptcy, or sequestration, as viable alternatives to help resolve their financial situation.