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FAQs

Our debt advisers have collated the questions they are commonly asked below for you.

All the answers in one place

Protect Trust Deeds

A Protected Trust Deed is really simply a formal agreement between you and your creditors. If you live in Scotland, and have unsecured debts of £5,000 or more, then a Protected Trust Deed is a potential option for you.

For more information, take a look at our Protected Trust Deeds page.

A protected trust deed is administered by a licensed insolvency practitioner.  This person is known as your Trustee, and they deal with all your creditors on your behalf.

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 the period of the Trust Deed, any remaining debt is simply written off – leaving you free to get on with your life, completely debt-free.

For more information, take a look at our Protected Trust Deeds page

The Trust Deed is a formal agreement between you and your creditors to pay back an affordable amount over a period of time – this is usually a period of 4 years.

For more information, take a look at our Protected Trust Deeds page.

There are different debt solutions for the various parts of the United Kingdom: this is based on separate legal systems and legislation.

An Individual Voluntary Arrangement or IVA applies to England, Wales and Northern Ireland, but people in Scotland cannot enter an IVA.

In Scotland, there is a similar Scottish debt solution called a Protected Trust Deed.

For more information, take a look at our Protected Trust Deeds page.

There are many advantages in entering a Protected Trust Deed.  One main one is that Any remaining debt at the end of the period of your Trust Deed will be written off and you will be completely debt-free.

For more information, take a look at our Protected Trust Deeds page.

A Trust Deed may make it more difficult for you to get credit for a while once your Trust Deed has been finalised, and this constitutes one of the main protected trust deeds disadvantages.

For more information, take a look at our Protected Trust Deeds page.

The information will stay on your credit file for 6 years after you sign a Protected Trust Deed.

In order to safeguard your assets, you need to convey all your assets to your Trustee for the Trust Deed to have protected status.

By making all your payments under your Protected Trust Deed, you have fulfilled all requirements and none of the creditors contained in your Protected Trust Deed can ask you to pay any remaining balance on monies that are still owed.

These amounts are simply written off at the end of the 4-year period of the Protected Trust Deed.

Finishing your Protected Trust Deed is a chance to start afresh and build on your success.

One of the first things to do is to check that your credit file has been updated to reflect the fact that you have met all your obligations under the Protected Trust Deed.

YOUR DAS QUESTIONS ANSWERED

Debt Arrangement Scheme

Set up by the Scottish Government, the Debt Arrangement Scheme (DAS) is a useful alternative to insolvency.

If you live in Scotland, it is an effective way of preventing aggressive court actions being taken by creditors, and it allows you to manage your unsecured debts and work your way to a debt-free and much happier future.

For more information, take a look at our Debt Arrangement Scheme (DAS) page.

Debt Arrangement Schemes are intended for people who have and can demonstrate a regular income.

They are really for people who can pay back their debts over a longer period, but who are currently suffering from debt and high interest payments on their debt – making it harder and harder to keep up their current payments to creditors.

If this is you, then a debt arrangement scheme could be the right option.

For more information, take a look at our Debt Arrangement Scheme (DAS) page.

A Debt Arrangements Scheme (DAS) is essentially an agreed plan to pay back unsecured debt over a given time period and to a debt payment programme or a DPP.

Your Debt Arrangement Scheme (DAS) approved advisor is at the heart of making this work.  They work with you and your creditors to agree a Debt Payment Programme.

Once the Debt Payment Plan is agreed, the Debt Arrangement Scheme (DAS) will require you to make a single lump payment each month to a payment distributor who then pays all your creditors.

It means that you do not have to have any contact at all with any of your creditors: you simply need to make the money available to pay each month.  That can be done through a simple direct debit, standing order or by a card payment.

For more information, take a look at our Debt Arrangement Scheme (DAS) page.

A Debt Arrangement Scheme allows you to regain control of your personal finances and gives you peace of mind knowing that no further action can be taken against you.

It provides legal protection that is based on government legislation.  It acts as a major safeguard for your assets in that you are allowed to pay back your debts without having to realise the value of your assets.

Your Debt Payment Plan will be visible to lenders on your credit file.

The length of time that it will be visible depends on how long the plan lasts before it is paid off.  Your credit file contains at least 6 years of history, so a DAS could affect your credit rating for at least 6 years or until payments under the Debt Payment Plan fall off your record.

The length of a Debt Payment Plan is agreed on an individual basis to reflect your circumstances and is usually less than 10 years, although it can be longer than 10 years in certain circumstances.

You will be able to obtain further credit, either alone or jointly, up to an amount of £2,000.  You can get credit over and above £2,000, however, you must meet the criteria and obtain approval from the DAS Administrator.

Can you pay everything off sooner

Full and Final Settlement

A Full and Final Settlement is when a creditor agrees to two things.  The first is that they will accept less than the whole debt in order to clear a debt in ‘full’.

The second key point is that they agree that they will not take any action to recover the remainder of the debt (this represents the ‘final’ part of this debt solution).

For more information, take a look at our Full and Final Settlement page.

A Full and Final Settlement does not always have to come from you: it could be the case that a creditor will write to offer you a Full and Final Settlement too.

This happens typically if you are already in a debt management plan – or if you have defaulted on the debt.

For more information, take a look at our Full and Final Settlement page.

If you do have access to money to make a Full and Final Settlement offer, then you can negotiate with creditors for debt settlement.

You do not have to make the same offer to all your creditors.

In a Full and Final Settlement how much to offer is always the big question.  Full and final offer percentages that need to be based on your particular circumstances, the history of your debts and any payments that you have made/not made to date.

If you are offering your creditors and Full and Final Settlement, then it is advisable to explain the source of your funds.

Providing an income and expenditure spreadsheet to accompany your letter is a good tactic as it will demonstrate to the creditor that they are going to have to wait a very long time before you will have paid off the debt; they need to balance that prospect against the reality of an offer of real money right now

Such offer letters require close scrutiny to be sure that a creditor really is writing off the remainder of a debt.  You can also negotiate over any offer.

If a debt has been defaulted, it will drop off your credit record after 6 years.  A full and final settlement will not alter this fact or make the debt stay on your credit report for longer.

If you are in a position where you are likely to secure a full and final settlement, then your credit score is going to be very poor to start with.  But that is not all bad news.

The good news is that things can only get better, and that you now have a chance to start clearing your debts and working towards a better credit score future in the years ahead.

Sorting your debt by re-mortgaging

Re-mortgaging Debts

You can re-mortgage your house to pay off your debts.  This can be done by releasing equity in your property (in the form of a lump sum), which you can then use to pay off your other debts, or by reducing your monthly mortgage payments - leaving you with money to pay off your other debts.

Re-mortgaging can also be a good way of raising more money on a low rate – to pay off other unsecured debts.

However, you do need to check that you are taking account of all fees to be sure that there are no hidden costs to the deal – and that there are no better and cheaper ways of borrowing the money you require.

For more information, take a look at our Re-mortgaging page.

If you are looking to re-mortgage to pay off debt, mortgage lenders will look at three principal things: your credit file; the value of your house; the amount you want to borrow.

For more information, take a look at our Re-mortgaging page.

It is possible to re-mortgage with debt, but having debts or arrears will have a negative effect on your credit rating. This will have an effect on the offers that you will receive and you will be unlikely to get a good mortgage offer.

You should also remember that, if you are currently on a mortgage deal, there could very well be a redemption fee to pay too.

For more information, take a look at our Re-mortgaging page.

You will need to consider a number of issues if you are thinking about re-mortgaging; these include rates, fees and type of mortgage.  You also need to think how re-mortgaging will affect your financial future.

Answers to your Secured loans questions

Secured Loans

A secured loan is debt that is secured against an asset that you own – this could be your house, or even your car. It all depends on the value of the item compared with the amount you have borrowed.

For more information, take a look at our Secured Loans page.

Lenders like the fact that they can get access to and sell one of your assets that has a definable value and can be sold quickly in the event of a default on your part.

Interest rates tend to be cheaper because of this lesser risk for lenders; but the risks for you are very real.  If, for any reason, you cannot make payments in relation to a secured loan, then your creditors can sell the assets (usually your home) that you have used to secure the loan.

For more information, take a look at our Secured Loans page.

Secured loans can come in many forms.  They can be marketed as:

  • Home equity or secured homeowner loans
  • Second mortgages
  • First mortgages
  • Debt consolidation loans (some types are secured loans)

Most secured loans are used to borrow money usually in excess of £10,000, although it can be less.

It is vitally important to consider the affordability of any secured loan repayments: there is so much at stake if you find that you cannot.

The consequences of failing to make payments can range from affecting your credit score to losing your home.

Finding out all about credit card debt

Credit Card Debt Consolidation

Credit card debt consolidation can be a way of bringing down the interest rate on your debt and reducing the number of creditors that you owe money to.  It can also reduce your debt payments in terms of the amount you pay each month.  Credit card debt consolidation involves taking out new credit to pay off your debts.

For more information, take a look at our Credit Card Debt Consolidation page.

As well as looking at the deal itself, including any hidden fees and costs, it is important to think about the future and what could happen.

What would happen if, for example, you fell ill or you or your partner were made redundant?  What if interest rates go up?

For more information, take a look at our Credit Card Debt Consolidation page.

WE answer your bankruptcy queries

Bankruptcy

You have to fulfil two key criteria to be able to enter into bankruptcy (sequestration) in Scotland: you have to be resident in Scotland; and you have to have unsecured debts of more than £1,500 that you are unable to pay back.

For more information, take a look at our Bankruptcy page.

You can declare bankruptcy or enter into sequestration voluntarily. To do this, you need to submit a debtor application. You will be issued with a Certificate of Sequestration and will submit your application to the Accountant in Bankruptcy.

Your application will normally be processed within 5 working days. The Accountant in Bankruptcy will also arrange for a Trustee to be appointed in your case to deal with all your creditors.

For more information, take a look at our Bankruptcy page.

Filing for bankruptcy or sequestration is not necessarily bad.  In the right circumstances, it can be a way of taking control of things and getting the best outcome for you.

For more information, take a look at our Bankruptcy page.

Provided you a) live in Scotland, b) have not been sequestrated in the past 5 years, and c) owe more than £1,500 in unsecured debt, then you can file for bankruptcy or sequestration where you are obviously insolvent and unable to pay off your debts.

You do not need creditor approval to file for bankruptcy or sequestration.

Filing for bankruptcy, or sequestration in Scotland, is entering into a form of insolvency and involves your assets being vested in the Trustee appointed to deal with your sequestrated estate.

Your name and details will be added to the Register of Insolvencies, and will remain on this public register for a period of 5 years.

If you owe more than £3,000 to a creditor or creditors, then your creditors can force you into sequestration or bankruptcy.

Your partner is not responsible for your personal debts – even if you are married.  However, in the case of any joint debts, your partner remains jointly liable for the full amount.

The three types of bankruptcies are: involuntary bankruptcy; voluntary bankruptcy; and Minimal Asset Process (MAP) bankruptcy.

It will cost you £200 to declare bankruptcy or enter into sequestration through the full administration route or £90 if applying via the Minimal Asset Process route.  This fee is paid to the Accountancy in Bankruptcy, the governing organisation that oversees all personal bankruptcy in Scotland.

When you are discharged from bankruptcy, your debts are written off – and this includes income tax and most other debts.

Importantly too, if HMRC pursues you as a creditor, and makes you bankrupt, you will not have to pay the court fees.

Answering your questions on our fees

Fees

We offer free debt advice, so our initial consultation is free of charge.

If you enter any of the debt solutions noted below then the following fees will apply.

Debt Arrangement Scheme (DAS)
There are initial set up fees which are normally equivalent to the first two contributions.

These are used to cover the work involved in setting up your DPP.  Thereafter, there is a monthly fee of 10% of the contribution, subject to a minimum of £20 and a maximum of £150.

These are used to manage your DPP and deal with any issues which may arise over the term.

Trust Deed
Based on current regulation there is a fixed admin fee typically of £2,500 plus a percentage of gross realisations, typically this figure is 20%.

The total average fee is normally in the region of £4,000.  Fees are met from the realisations in the estate.

Sequestration
The fees are charged out on a time and line basis for the duration of your bankruptcy.

Fees are normally audited by the Accountant in Bankruptcy who charge a 17.5% audit fee in relation to the Trustee’s fees and outlays.

All fees are met from the sequestrated estate.

 

Your credit rating may be affected. Your details will be entered into a public register should you decide to go ahead with one of these options.

There are initial set up fees which are normally equivalent to the first two contributions.

These are used to cover the work involved in setting up your DPP.  Thereafter, there is a monthly fee of 10% of the contribution, subject to a minimum of £20 and a maximum of £150.

These are used to manage your DPP and deal with any issues which may arise over the term.

Based on current regulation there is a fixed admin fee typically of £2,500 plus a percentage of gross realisations, typically this figure is 20%.

The total average fee is normally in the region of £4,000.  Fees are met from the realisations in the estate.

The fees are charged out on a time and line basis for the duration of your bankruptcy.

Fees are normally audited by the Accountant in Bankruptcy who charge a 17.5% audit fee in relation to the Trustee’s fees and outlays.

All fees are met from the sequestrated estate.

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