When you reach the point where you wish to seek financial help and advice because of an inability to pay your bills and live comfortably then it’s time you consider the legal debt solutions available to you.
The Scottish government have introduced solutions to aid Scotland population in dealing with the debt while maintaining a return to creditors. Their are four main solutions backed by government, three of which are forms of personal insolvency and will seriously affect your ability to obtain credit in the near to long term.
Credit cards, store cards, personal loans and buy now pay later items tend to be the majority of debts that the average Scottish debtor has, these debts can be dealt with in a number of ways but are dependent on whether or not you are employed, earning more than minimum wage, and have any valuable assets belonging to you.
The protected trust deed is a solution whereby the debtor must hand their estate over to the hands of a ‘trustee’ who will not be in charge of their financial affairs for the remainder of the trust deed. The trust deed hall be granted ‘protected’ status once it has been established that all of the debtors finances do indicate their inability to pay back their debts in the time frame originally agreed upon. The trust deed is a form of insolvency and before entering into this solution it is wise to consider the consequences both on your credit rating and on your personal belongings.
Debt Arrangement Scheme
The government backed DAS is a scheme whereby none of your assets or belongings are brought into your inability to pay back your debts at the original agreed upon rate but you will be required to pay back the full amount of debt owed. The main benefit to the debtor is that you will not be required to pay interest and charges and the amount outstanding at the time of entering the debt arrangement scheme is the final balance owed to your creditors. This means that rather than your debts mounting up due to interest and charges added, you will be paying towards the actual debt.
Scottish bankruptcy is known as Sequestration, Sequestration is Insolvency and is your declaration of your inability to pay your debts at all. This can often be the result of a change in personal circumstance and be a last resort. If you are earning a reasonable income and have disposable cash at the end of the month then you will be required to make payments towards bankruptcy for up to three years in order to satisfy your creditors.
Low income low assets known in Scotland as ‘LILA’ is simply bankruptcy for those who are not earning enough to contribute anything towards a sequestration order. The LILA can be entered into by the debtor via the services provided from the AIB (accountant in bankruptcy) for a fee of £200. This fee goes towards administration of the LILA and allows your creditors to be made aware that you will no longer be legally obliged to make payments towards your outstanding debts as you have been made legally insolvent and your estate is now in the hands of an insolvency practitioner.
Legislation in Scotland is different to that in other parts of the UK. In the rest of the UK the equivilents of the Scottish debt products are known as Inventory arrangements or ‘IVA’s, Debt Management Plans ‘DMP’s’ or Debt Repayment Programmes. Check for more info at http://www.debtadvisoryscotland.com
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