Help with council tax debt
As reported recently in the press, outstanding council tax debt in Scotland has increased by nearly two-thirds since the pandemic. This, coupled with rising energy prices and the cost-of-living crisis, is forcing beleaguered households to fall behind as people naturally prioritise food, housing and energy costs.
So where will it end? Inflation, which is the price at which goods and services rise that is calculated by the Bank of England (BOE), currently sits at 10.5%. Interest rates are currently 3.5%.
As the purchasing power of our money decreases, due to rising inflation and interest rate increases impacting mortgages, we find that we are worse off as our money doesn’t go as far as it used to. The BOE forecasts that inflation should fall gradually over the next year and markets expect the base interest rate to peak at 4.25% by the middle of next year.
But that doesn’t really help people who are currently struggling.
In Scotland, there are several excellent solutions to help deal with problem debt, whether it be council tax debt, credit cards, HMRC, mortgage arrears or other unsecured debts.
A Moratorium – can be put in place to stop creditors from taking action for six months. While it is not a debt solution, it is a way of providing some breathing space so you can seek appropriate debt advice in order to make the correct decision on how to deal with your problem debt.
The Debt Arrangement Scheme (DAS) - allows you to repay your debts over several years, freezing interest and charges and protecting assets, such as your home. Set up by the Scottish Government, the Debt Arrangement Scheme is a useful alternative to insolvency. It is an effective way of preventing aggressive court action from being taken by creditors, and it allows you to manage your unsecured debts, taking back control.
A Protected Trust Deed (PTD) - is a form of insolvency. That might sound intimidating, but it is merely a formal agreement between you and your creditors. There is an element of debt relief, and your assets may be at risk.
It is dealt with and run by a licensed insolvency practitioner and is a formal agreement between you and your creditors to pay back an affordable amount over a period of time – usually four years.
When you sign a trust deed, you agree to make one affordable payment each month to your Trustee for the duration of the trust deed. At the end of this period, any remaining debt is simply written off, leaving you to get on with your life, debt-free.
Bankruptcy (Sequestration) – involves transferring your assets into the care of a Trustee; appointed to pay off your creditors as far as this is possible.
Bankruptcy is a formal insolvency process under which your estate transfers to your Trustee, known as “vesting”. Your Trustee is appointed to take control of your financial situation as a whole and will realise assets where appropriate and liaise with your creditors with a view to paying a return to them where possible.
We are authorised and regulated by the FCA to provide debt advice and can help you to find the right solution to resolve your debt problem.
For free and confidential advice from our highly experienced team please contact us.
Contact:
Ian Brown
Senior Insolvency Manager
ibrown@thomsoncooper.com
Phone: 01383 628800
Mob: 07519 124657
Richard Gardiner
Partner
rgardiner@thomsoncooper.com
Phone: 01383 628800
Mob: 07872 376105
Maureen Walls
Senior Insolvency Manager
mwalls@thomsoncooper.com
Phone: 01383 628800
About the author
Ian Brown
Ian is an expert in the Debt Arrangement Scheme and Business Debt Arrangement Scheme, assisting individuals, sole traders and partnerships.
He also advises on personal debt solutions recommending the best option to resolve problem debt issues.