Bankruptcy is a formal debt solution for those who have an amount of debt which they cannot repay.
In a bankruptcy, most debt types are written off. Deciding to go bankrupt is a very serious step that involves fees and can impact different areas in your life, such as your job or home.
What is Debt Consolidation?
You may be able to reduce your monthly payments, so you don’t have to resort to a loan and get deeper in debt.
What is an IVA?
Individual Voluntary Arrangements (IVA’s) were introduced by the Government in the 1986 Insolvency Act as an alternative to bankruptcy. They were put in place to help anyone in serious debt finding it difficult to make their monthly payments. If you live in Scotland the equivalent solution is a Trust Deed.
What is Debt Management?
A Debt Management Plan, or DMP, is an informal agreement between you and your unsecured creditors to pay back non-priority debts, reducing your monthly payments to a single affordable amount each month. There are both fee-paying and free-fee debt management plans available.
What is Sequestration?
Sequestration is the Scottish equivalent of Bankruptcy, a formal arrangement to deal with debts that you are unable to repay with within a reasonable period of time.
To qualify, you must have debts for over £3000 and be in receipt of a “charge for payment” or “statutory demand”. In addition you must not have been bankrupt 5 years prior to your application.
What is Protected Trust Deed?
A trust deed is a legally binding arrangement where you make reduced payments for a period of 4 years.
Once the trust deed has been protected, creditors cannot take any action against you to recover debts and no interest and charges can be applied.
At the end of the 4 years, provided you have made all your payments, any remaining debt is written off.
Please be aware that lenders are not obliged to accept less than contractual, payments or to freeze interest and charges. This may result in an increase in the total, amount repayable and may affect your credit rating.
What is Debt Relief Order?
A Debt Relief Order is a way to have unmanageable debt written off if you have relatively low income and few assets.
A DRO can be used if you don’t own your own home and your debts are £20,000 or less. However, there are some kinds of debt that aren’t included in this limit, so it’s best practice to check whether you’re eligible before you decide.
What is Debt Arrangement?
If you’re a Scottish resident looking for help with debts, a Debt Arrangement Scheme (DAS) may be the solution for you. With a DAS, you can freeze interest and spread the cost of repayments over a longer period, making it affordable for you.