Scottish Debt Solutions: A guide
If you're a resident of Scotland and you're struggling with your unsecured debts it can be hard to know where to turn. There are, however, debt solutions available that could help you.
A good way to start figuring out which Scottish debt solution could help you is to create a budget for your 'average' month. This involves looking at how much you spend per month on 'priority' costs, like your rent or mortgage, food, fuel and bills. After you've accounted for these costs you can see how much you have left over, which can help you decide which debt solution could give you the best results. That's not the only factor, though - you'll also need to think about whether or not you'll be able to repay your debts in full.
What if I don't quite have enough each month for my repayments?
If you've drawn up your budget, seen how much you need to pay in unsecured debts and realised that your disposable income comes up short, the Debt Arrangement Scheme (DAS) could be your best option.
It could lower your monthly repayments to an affordable level - that you would be able to commit to until all of your unsecured debts are repaid. Your lenders would have to agree to this before it can go ahead, but they're more likely to if they can see that it's the best way for them to get their money back.
You would continue making these smaller payments on a Debt Payment Programme (DPP) until your debts are fully paid off - and interest and charges would be frozen as well.
During your DPP you will benefit from advice and guidance from a debt professional, who would organise the process and deal with negotiations with your lenders.
What if I don't think I can repay my debts in full?
If you can't see a way to repay your unsecured debts in full in any kind of realistic timeframe, a Trust Deed might be more suitable for you.
If enough of your lenders agree to the proposed terms, your Trust Deed will become protected. A Protected Trust Deed means that your lenders won't be able to take any further action against you - including petitioning for your bankruptcy, asking for higher payments or taking you to court.
You'd still have to make monthly payments - as much as you can afford - but after you've successfully finished your Trust Deed (usually after three years) your remaining unsecured debt will be written off.
What are the drawbacks?
Both of these debt solutions will damage your credit rating for up to six years - though continuing to miss repayments would also damage it.
During your Trust Deed, you might also be asked to release equity in your home if you own one. This may still be preferable to bankruptcy, however, where you would probably have to sell your home.
Both of these debt solutions are only available to those who need them - and struggling to afford their unsecured debt repayments as they stand. If you're not sure what you're eligible for, fill out our debt solution finder to talk to a debt professional who will discuss your options with you.