Options in Scotland
If your financial situation becomes too difficult to sort out on your own, then the following options may be available to you.
For more details and for information on how to go about these, we strongly suggest you seek professional advice from the Useful Contacts shown on the Financial difficulties page.
Granting a Trust Deed is voluntary and can only be initiated by you. It is only available to residents in Scotland and offers an alternative to sequestration (bankruptcy).
A Trust Deed is a way of setting up a monthly repayment schedule based on what you can afford to pay, if you cannot repay your debts in full. A deed will typically last for a term of 3 years, after which any remaining debts are normally written off.
Important information about Trust Deeds:
- A Trustee handles all correspondence from creditors
- A Trust Deed is usually more flexible and costs less to administer than sequestration (bankruptcy)
- If you're a homeowner you may have to release any equity in your property to pay your creditors
- Entering into a Trust Deed will affect your credit rating and will remain on your credit file for up to 6 years
In some circumstances you can petition for your own sequestration (bankruptcy). Your assets may also be sequestered (bankrupted) by somebody you owe money to, or by your trustee acting under a trust deed.
Sequestration only applies to residents in Scotland.
In a sequestration, a Trustee (a licensed insolvency practitioner) is appointed to recover, manage and sell-off your assets to pay your creditors. The Trustee may also seek a contribution from your income if you're employed. Sequestration normally lasts for 3 years.
Important information about sequestration:
- If you own your own home you may be forced to sell it
- If you receive any windfalls while you're sequestered, for example an inheritance, you may have to pay such windfalls to your trustee
- While you're sequestered you won't be allowed to borrow more than £250
- Sequestration will affect your credit rating and you'll probably find it difficult to obtain credit in future
Debt Arrangement Scheme (DAS)
If you have some surplus income and have more than one debt which you'd like to pay off, you may be able to apply for a Debt Payment Programme (DPP) under the Debt Arrangement Scheme (DAS).
DAS is only available to residents in Scotland.
Under DAS, you make a single regular payment to an approved payments distributor. They then distribute sums to the people you owe money to. If you keep to the agreed payments, your creditors will not be able to take any further action against you.
Important information about DAS:
- DAS is always free for people paying debts under an approved Debt Payment Programme
- You cannot apply directly for a DAS. You will need to see an advice agency which will refer you to an approved money advisor.