Author: Craig Stocks

What is an Employer Salary Advance Scheme?

Posted on by Craig Stocks
For an increasing number of cash-strapped Scots, a fairly new solution to short term money problems has emerged in the shape of Employer Salary Advance Schemes (ESAS). Companies such as Hastee and Wagestream have emerged as the leading providers of Employer Salary Advance Schemes, a new form of Payday Loan, albeit without the infamously high interest rates that their predecessors had, that can allow individuals to access up to 50 percent of their wages before their usual payday. While it is highly unlikely that an individual may have built up problem debt exclusively with an ESAS, they’re more likely to become an issue for people already experiencing financial difficulties. The main concern with the ESAS is that, if used regularly, the fees can add up to a significant amount. Despite these fees often being between 0-5% of the loan provided, over time this can accumulate rapidly. Therefore, without realising, ESAS borrowers can be paying hundreds of pounds in fees if they use ESAS multiple times. Another concern area with ESAS is the potential for its borrowers to become reliant on the service. If used continuously throughout the year or even over a few months, ESAS can cause budgeting to become focused on two payments a month instead of one. E.g. having to borrow early in the following month as their ‘final salary’ has been reduced by repaying the previous loans. As a result, anyone considering borrowing through their employer’s ESAS system should be careful about how often they are using them to get through periods of financial difficulties.

Can Employer Salary Advance Schemes result in an unaffordable debt problem?

In short, yes, Employer Salary Advance Schemes can become part of an eventual unaffordable debt problem for people who have been given access to funds but not correctly assessed for affordability. In a similar way to the likes of payday loans previously, An ESAS can push people with unaffordable debt into a problem debt cycle. It is therefore anticipated that these Employer Salary Advance Scheme services will be regulated, like the payday lenders they aimed to replace, or more recently like Buy Now, Pay Later lenders such as Klarna and ClearPay. Whilst still in their infancy, ESAS lenders predominantly work with hospitality, retail and healthcare employers. The regulatory body said that they are seeing new providers joining the market and expect the sector to expand in the next few years. In July 2020, the regulatory body issued a statement that warned of a lack of transparency around costs, and the likelihood of workers making repeat withdrawals and becoming dependent on the services to make ends meet. The regulator said that while ESAS products do have benefits, it is important that employees and employers are aware that there may be some risks in using ESAS lending services that could result in Employer Salary Advance Scheme debt issues further down the line. Lack of credit regulation. The regulatory and statutory rights and protections, from which borrowers under consumer credit agreements benefit, do not apply, as ESAS usually operate outside of credit regulation. For example, ESAS providers have no obligation to check affordability. Therefore, employees will need to satisfy themselves that they will have enough money on payday to pay other expenses they may incur at that time (for example their mortgage or rent payments) when they receive the balance of their normal salary. The high-cost short-term credit (HCSTC) price cap on charges does not apply either, and the Financial Ombudsman Service will not be able to consider complaints. Lack of transparency about cost. The amount of the transaction fee might be a modest sum. However, there is a risk that employees might not appreciate the true cost and how this compares with credit products such as loans. Employees may find it difficult to compare the fixed transaction fee charged for each drawdown to an interest rate/APR. In some cases (depending on the amount of the advance and when it is used in the pay cycle) this may result in it being equivalent to an interest rate that is higher than the price cap for payday loans and other forms of HCSTC. This can become particularly expensive if an employee uses the product repeatedly Dependency and repeat use. If an employee takes their salary early, it is more likely they will run short towards the end of the next payday, potentially leading to a cycle of repeat advances and escalating fees. Lack of visibility for credit reference agencies. Credit reference agencies will not record use of the product, so creditors who subsequently carry out credit searches won’t necessarily be aware that the customer is using ESAS. This may in some cases be relevant to creditors’ assessment of credit or affordability risk and might result in unaffordable loans being made. In February 2021, the regulatory body followed up on the regulation of ESAS loans and highlighted a couple of examples: Paul, an ESAS user that spoke to the regulatory body said “I would like to keep it personal and my employer not to know. It could affect your progression.” Emily, who also spoke to the regulatory body, but who isn’t a current ESAS borrower said: “I wouldn’t really want my employers to know that I’m struggling with money every month.” The regulatory body further warned that “Where ESAS providers also offer regulated credit products or at least act as a broker, there is a potential conflict of interest. If poor use of an ESAS creates a need for credit, for example, to cover a shortfall in wages at the end of the month, the provider could profit from this if they offer alternative credit products. However, given the size and scale of the market, it would be disproportionate, at this time, to introduce a bespoke regulatory regime. Unlike BNPL (Buy Now, Pay Later), ESAS is not a form of credit relying on a legal exemption, and would therefore require a significant regulatory change to be brought within the perimeter. Although the review has identified a number of risks of harm associated with the use of these products, the Review hasn’t seen evidence of crystallisation or widespread consumer detriment. Nonetheless, the market should continue to be monitored and if the position changes, the question of bringing ESAS within the regulatory body’s remit should be reconsidered.” In their defence, Wagestream claimed that “data clearly shows employees use Wagestream responsibly – with 93% of employees accessing less than 30% of their available wages – as it is their hard-earned money they are spending on emergency expenses, not falling into a cycle of credit and debt.” Hastee told the Guardian newspaper last year that “Safety and governance are baked in with wellbeing algorithms monitoring a user’s shifts, earnings, deduction frequency, deduction amount, and the type of spending, others in the industry may be regulated because they provide some sort of consumer credit, or control payroll, which Hastee does not.” Hastee also advised that any “unusual behaviour” will mean users are directed towards charities like the Money Advice Service. Speaking on improved regulation of the Employer Salary Advance Scheme borrowing, Trust Deed Scotland said: “These schemes can help employees deal with unforeseen expenses and occasional short-term cashflow when used in the right way. However, we’re pleased that the regulatory body has committed to investigating ESAS products in the same way that they’re currently exploring the lack of regulation around Buy Now, Pay Later products. Like guarantor loans before them and BNPL products more recently, there are of course many thousands of people who use these products on a regular basis without falling into a debt trap, however, there are also many thousands who have developed problem debt as a result of those products not being correctly assessed for affordability. And, we must also stress that there is currently no alarming trend with Employer Salary Advance Schemes developing into unaffordable debt. We welcome any opportunity for these services to be regulated fairly by the regulatory body before any such Employer Salary Advance Scheme debt problem can be allowed to happen.”

The demise of Payday Loans?

Payday loans have become significantly more regulated than they were since they first started to appear in the mid-noughties. Arguably the most famous rise and collapse of a payday lender was that of Wonga.com, created in 2006 by co-founded by South African tech entrepreneurs Errol Damelin and Jonty Hurwitz. Before going into administration, Wonga, once boasted of being able to get cash into a borrowers account within 15 minutes. However, this was often with little or no affordability checks being put in place. With many thousands of customers forced into taking on unaffordable debts. Wonga.com collapsed in 2018 with administrators for the lender revealing that as of 2020, that 389,621 eligible claims had been made since Wonga’s demise. The average debt owed to a payday loan in their peak of 2013 was £1,657 according to the Debt Charity Stepchange. However, many other payday loans companies do remain open and operate in Scotland, including Lending Stream. Mr Lender and Satsuma Loans among others.

Get Tailored Debt Advice today

If you’re worried about your finances and would like to take control of your unaffordable debt, you can contact Trust Deed Scotland on 0141 221 0999, or complete our Trust Deed Wizard tool to begin your debt help journey today. As a leading provider of formal Scottish debt solutions including Trust Deeds, and the Debt Arrangement Scheme, our experienced debt advice team are able to work with you and offer tailored debt advice that puts you at the heart of the decision-making process.

Rent Arrears Debt Warning by Resolution Foundation

Posted on by Craig Stocks
Almost half a million people across the UK have fallen behind on rent or mortgage payments as a result of the coronavirus pandemic, reports the Resolution Foundation. The Resolution Foundation is a UK think-tank that is focused on improving the living standards of those on low-to-middle incomes. Founded in 2005, the Foundation’s established work programme includes incomes and inequality; jobs, skills and pay; housing, wealth and debt; tax and welfare; public finances and the economy. The study into rent arrears found that as many as 450,000 out of an estimated 750,000 people in arrears on housing payments and reporting on the findings, Lindsay Judge a Senior Research and Policy Analyst who leads on housing, advised that many families had suffered ‘huge hits’ to their household earnings and that few have savings to fall back on. 300,000 people are thought to have dependent children. “To make matters worse, measures that could ease the pressure, such as discretionary housing payments from local authorities and negotiated rent reductions from landlords, are not getting through to those that need them.” The Resolution Foundation added: “Both benefit cuts and the end of furlough are pencilled in for the spring, either of which will strain family incomes further. Likewise, unemployment looks set to rise, rather than fall, through 2021, potentially driving up arrears further still.” Trust Deed Scotland said “We speak to hundreds of people every month and most have voiced concerns about their unaffordable debts which typically include the likes of credit cards, catalogues and unsecured loan debt. However, with a number of people having been made redundant in the last year, or who are currently furloughed as part of the Job Retention Scheme – we’ve seen many instances of social and private tenants not being able to afford the repayment of their rent. While there is currently a ban on evictions in Scotland, we’re concerned about the longer-term impact to those individuals’ finances caused by building up rent arrears, as well as other debts, with no clear end in sight. As a result of this, many are falling into a cycle of debt where they are using credit to pay credit and incurring further debt to pay for general living expenses, including priority bills. If you are struggling with unaffordable debt and have dependent children – we also urge you to apply for the School Age Payment award of £250 before the deadline ends on 28th February. The one-off £250 Payment is currently open to families with a child born between 1 March 2015 and 29 February 2016. It can be used for anything from a warm coat to books and toys.”

Support for Scottish tenants with Rent Arrears Debt?

In Scotland, increased support for Scottish tenants in danger of developing rent arrears debt was introduced in December 2020 in the shape of a government-funded Tenant Hardship Loan Fund. The government have set aside £10m for the Tenant Hardship Loan Fund, which is an interest-free loan and is designed to help people who have had their finances or employment impacted by the coronavirus pandemic and do not have other means of housing support. Loans are available for private and social tenants up to a maximum of nine months’ rent costs covering rent arrears and future rent, where those arrears have arisen since 1 January 2020. However, the tenant hardship loan fund will not be available where a tenant had rent arrears before this date. The Tenant Hardship Loan can include up to a maximum of three months of future rent payments as part of the nine-month total. The lending arrangement provides an additional short-term offer that supports tenants to manage rent arrears and helps them to come back into paying their rent. Loan repayments under the tenant hardship loan scheme will be deferred for six months as standard and repaid over a five-year period. The Scottish Government hopes that this helps solve any issues with the continuing uncertainty around the impact of the Coronavirus pandemic. However, as part of the Scottish Government’s commitment to responsible lending, the Tenant Hardship Loan Fund offers will be subject to an affordability assessment. The affordability assessment looks at the applicant’s incomings and outgoings to check whether the applicant has enough surplus income, after other costs, to make the loan payments. Please note: Applications for the Tenant Hardship Loan Fund were discontinued for new applications in December 2021.

Can I include Rent Arrears Debt in a Trust Deed?

The legal position is that all rent arrears should be included in your Trust Deed. However, to avoid any issues with your landlord, especially if you are a private tenant, then you should take advice before considering entering into a Trust Deed whilst you have rent arrears.

Rent Arrears Debt and the Debt Arrangement Scheme

If you have build up rent arrears debt, you may be able to apply for a Debt Payment Programme (DPP) under the Debt Arrangement Scheme (DAS). A DPP, which is a formal debt solution, will give you time to pay off your rent arrears debt at a rate you can afford, and include all other unaffordable, unsecured debts that you are struggling to afford such as credit cards, unsecured loans and council tax arrears. In addition to being able to include your rent arrears debt and credit card debts or other debts that you owe – any interest and charges on those debts are legally frozen, and if you’re receiving distressing telephone calls, text messages and letters threatening you with visits from Sheriff Officers  – you can reduce and eventually stop this type of contact with an approved Debt Payment Programme. The Debt Arrangement Scheme has risks and benefits just like Protected Trust Deeds which have advantages and disadvantages. The Minimal Asset Process route to Sequestration may also be a suitable formal solution for people struggling with unaffordable debt. In order to find out what your options may be suitable for you, Trust Deed Scotland recommends talking to an experienced debt advisor and seeking tailored debt advice, based on your situation.

How to get Scottish Debt Advice today

If you’re worried about your finances and would like to take control of your unaffordable debt, you can contact Trust Deed Scotland on 0141 221 0999, or complete our Trust Deed Wizard tool for more information. As a leading provider of formal Scottish debt solutions including Trust Deeds, and the Debt Arrangement Scheme, our experienced debt advice team are able to work with you and offer tailored debt advice that puts you at the heart of the decision-making process.  

Trust Deed Scotland TV Advert

Posted on by Craig Stocks
As the country continues to cope with everything that’s going on at the moment, more people in Scotland are going to need help with their unaffordable debts. As reported previously, the demand for debt advice is set to increase in 2021 as many thousands of Scots recover from the impact of Covid-19 on their finances. Find out more about the latest Trust Deed Scotland TV campaign which is being broadcast across Scotland and is being fronted by our latest Trust Deed Scotland ambassador, Jennifer Reoch. The television campaign will raise awareness of both Protected Trust Deeds and the Debt Arrangement Scheme (DAS) across Scotland. Jennifer Reoch currently co-presents the Heart Scotland Drivetime Radio show with Des Clarke but Jennifer is also known for hosting shows across BBC Scotland and STV such as The Riverside Show, Live at Five, Scots In Paradise, Edinburgh Festival and the Scottish Children’s Lottery for STV. Jennifer has also appeared on This Morning on ITV. Having previously worked alongside Tamara Kennedy, it is important for Trust Deed Scotland to work with ambassadors who can help broadcast the availability of formal debt solutions in Scotland to as wide an audience as possible, and Jennifer Reoch fits this criterion perfectly.

Protected Trust Deeds

Who qualifies for a Trust Deed?
To qualify for a Trust Deed you must:
  • Have at least one debt
  • Have over £5,000 of debt
  • Be resident in Scotland
  • Have money left over after you’ve paid your living expenses
  • Have an income
Trust Deed Advantages
  • You can freeze your interest charges
  • Your payments are based on what you can reasonably afford
  • You can protect your assets such as your home and car
  • You’ll have no direct contact with your creditors
  • Once completed, your unaffordable debt will be written off and you will be debt-free
Trust Deed Disadvantages
  • Your credit rating will be affected
  • A Trust Deed may not be an option with certain job types
  • Creditors can vote against a Trust Deed becoming ‘Protected’

Debt Arrangement Scheme

Who qualifies for a DAS?
To qualify for the Debt Arrangement Scheme you must:
  • Have at least one unsecured debt.
  • Have spoken to a debt advisor, such as Trust Deed Scotland®.
  • Be resident in Scotland.
  • Be able to repay your debt(s) after you’ve paid your living expenses.
  • Not be in another form of debt repayment, such as a Trust Deed.
DAS Advantages
  • Payments based on what you can afford
  • Protected from legal action from creditors.
  • Your home will not be affected as long as you maintain your mortgage obligations.
  • Interest and charges are frozen once a Debt Arrangement Scheme is in place.
  • Apply for a six-month payment holiday should you find it difficult to repay.
DAS Disadvantages
  • Unlike Trust Deeds, a DAS lasts until the debt is cleared.
  • Your credit rating will be affected.
  • If you don’t keep up your payments the DPP could fail.

Alternative Scottish Debt Solutions

You can explore more options that may be available for you by calling Trust Deed Scotland on 0141 221 0999. The Minimal Asset Process (MAP) route to Sequestration is an alternative solution that can benefit people with a lower income, with few assets or full administration process Sequestration are two possible alternative Scottish Debt Solutions, depending on your own individual circumstances. If you would like to find out more, you can contact Trust Deed Scotland today for tailored debt advice, our experienced team can get an understanding of your situation and advise on the advantages and disadvantages of any solution that you may be eligible for.

Post-Pandemic Financial Recovery Plan Required

Posted on by Craig Stocks
Scotland’s fightback against the Coronavirus will require a post-pandemic financial recovery plan, with many people still unclear on what their long-term financial future will look like according to new statistics published by The Money Charity. Previous known as Credit Action, and established in 1994, the Money Charity is the UK’s Financial Capability charity, proactively providing education, information, advice and guidance to people of all ages throughout the UK, helping them to manage their money well and increase their Financial Wellbeing. As Scotland continues to recover from the pandemic alongside the rest of the UK, the new UK-wide data shows that:
  • 61% of self-employed individuals have a worsened financial situation due to the pandemic.
  • 4.5m workers in the UK were furloughed in January 2021 as a result of the pandemic. One-third of which have been furloughed for ten or more months.
  • A 454,000 increase in the number of people unemployed in the year to December 2020.
  • The average total debt per household, including mortgages, was £60,860 and per adult was £32,014, around 107.5% of average earnings.
  • People in the UK owed £1,696.4 billion at the end of December 2020.
The Money Charity further reported that based on December 2020 numbers, the UK’s total interest payments on personal debt over a 12month period would have been £44,910 million, an average of £123 million per day. The average annual interest per household would have been £1,611, and per person £848, 2.85% of average earnings. According to the Office for Budget Responsibility’s November 2020 forecast, household debt of all types is forecast to rise from £2.062 trillion in 2020 to £2.373 trillion in 2025. This would make the average total household debt £83,308 (assuming household numbers track ONS population projections.)

Consumer Credit Debt

At the end of December 2020, outstanding consumer credit lending was £202.1 billion, falling by £1.4 billion on the revised total for the previous month, and £22.2 billion less than in December 2019. Within the total, outstanding credit card debt came to £58.4 billion, a decrease of 19.3% (£14.0 billion) in the year to December 2020. Credit card debt averaged £2,094 per household and £1,101 per adult. A credit card on the average interest rate would take 24 years and 10 months to repay, making only the legal minimum repayments (interest plus 1% of the outstanding balance) each month. The minimum repayment in the first month would be £54 but would reduce each month. If £54 were paid every month, the debt would be cleared in 5 years and 2 months. Citizens Advice Scotland advised The Money Charity that in January 2021, they answered almost 10,000 calls in January 2021 alone, where the enquiry was related to debt. The biggest group was in regards to benefits, which equates to almost 32,000 of their January calls which ultimately, may lead to more longer-term requests for help relating to unaffordable Problem Debt. A stat that is made more worrying given that CAS currently is facing a fight of its own, as it struggles to find funds that will allow the service to remain open in a face-to-face capacity in areas of Glasgow such as Bridgeton, Easterhouse, Parkhead and Castlemilk. In January 2021, the Money and Pensions Service predicted that demand for Debt Advice is expected to increase by 61% in 2021. All eyes both north and south of the border will be focused on Rishi Sunak’s budget announcement later this week when the Chancellor will come under great pressure to elaborate on the country’s post-pandemic financial recovery plan. And, with Scottish parliament elections scheduled for May this year, a similar theme may emerge.

What help with unaffordable debt is available in Scotland?

To find out more about managing your money and getting free advice, visit Money Advice Service, an independent service set up to help people manage their money. You can also receive free, impartial debt advice from your local Citizens Advice Bureau, Stepchange and other debt charities, as well as tailored debt advice from ourselves, Trust Deed Scotland® You can contact Trust Deed Scotland today by calling us on 0141 221 0999.

Advice on your options today

If you do something about your debt today, you can stop worrying about it tomorrow. Our experienced team provide tailored debt advice that is…
    • Non-Judgemental – Our friendly, helpful team want to help find a solution that suits your needs.
    • Confidential – We do not share your details with any other companies. Your data is safe and secure.
    • Experienced – 25,000 people helped and over 3,000 five-star reviews on Trustpilot.
    • Tailored – Pros and cons of all formal solutions explained.
Trust Deed Scotland® offer formal Scottish debt solutions such as Protected Trust Deeds and the Debt Arrangement Scheme. If you have unaffordable debt, we can advise on how they work, advantages and disadvantages and alternatives. For life after debt, trust us.

Debt Snowball vs. Debt Avalanche

Posted on by Craig Stocks
The debt snowball and debt avalanche techniques are two ways of paying off your debt without utilising a formal debt solution. This is an alternative self-administered solution for residents of Scotland who are experiencing financial difficulties.

Alternative Debt Consolidation methods in Scotland

It’s always possible that a person can negotiate with creditors themselves and secure a short-term debt management plan, or voluntarily agree to pay off a debt over a longer-term. Sometimes without much of an impact against the individual, or in the case of more long-term arrangements, more commonly in the form of default notices being served as an indirect consequence. A default notice itself can have a negative impact on a persons credit history. Trust Deed Scotland® offer debt solutions including Trust Deeds and the Debt Arrangement Scheme and experienced advice on alternative Scottish debt solutions which may include the Minimal Asset Process route. The benefits of undertaking one of these solutions may include:
  • Reducing payments to an affordable level
  • Freezing interest and charges
  • Stopping creditor harassment over non-payment
  • Writing off unaffordable debt
The key to understanding what options are open to an individual and how they can clear their debts is to seek help from a qualified money advisor – this will then ensure that the individual receives transparent, balanced advice and that the pros and cons of each solution are fully explained. If you have unsecured debt and you’re finding these debts unmanageable – you can find out more about government-created debt management solutions available to you. A Trust Deed is only possible when you have over £5,000 of unsecured debts but you could still consider the Debt Arrangement Scheme if you have debts under that level, or indeed Minimal Asset Process if your situation is severe enough to warrant this as a solution. Depending on the individual’s credit rating, income and existing assets – There is the option of a debt consolidation loan which is often secured against a property, or it may be possible to secure a new credit card or lending source at a lower APR%. Using a secured loan against property may allow you to get a loan at a more competitive rate, particularly if you already have a bad/poor credit rating but your home is at risk should you not be able to afford repayment. Ultimately, whatever way works best for you will help you to realise your dream of enjoying a life after debt.

Debt Snowball vs. Debt Avalanche – What’s the difference?

If you’re determined on tackling your debts yourself, don’t need help with debts and have a large enough, disposable income that allows you to do so then you can investigate the two methods known as the debt snowball and debt avalanche systems. Both debt repayment plans are useful and help you regain control of your finances again, however, they both require a serious commitment from you and an element of frugal living. The truth is that the two methods are almost exactly alike in that they both ask you to pay minimum payments on all your debts except for one focus debt. The only difference between the snowball and avalanche is the order that you will pay off your debts. Some personal finance writers argue that one is better than another – but it’s really a matter of personal preference. With either method, you’ll send the creditor every extra penny you can find until the focus debt is paid off. As long as your total debt is going down then either is good.

What is the Debt Snowball technique?

The debt snowball technique involves making minimum payments on all debt, then paying off the smallest debts first to get them out of the way before moving on to bigger ones. The architect of this technique and coined phrase is the American personal finance guru Dave Ramsey. It is a debt reduction strategy that results in you paying off debts in order of smallest to largest. when the smallest debt is paid in full, the money you were paying to that debt rolls on to the next smallest debt you have. When you use the debt snowball technique, you will gain the instant feel-good factor of clearing a debt and moving onto the next.

What is the Debt Avalanche technique?

The debt avalanche technique involves making minimum payments on all debt, then using any remaining money to pay off the debt with the highest interest rate. The debt avalanche technique can often result in lower payments over time. The debt avalanche technique involves making minimum payments on all debt, then using any remaining money to pay off the debt with the highest interest rate. Using the debt avalanche to pay off debt will save you the most money in interest payments. For example, if you have £2,000 extra to devote to debt repayment each month, then the debt avalanche technique will make your money go the furthest. Say for example that you have the following debts: • £10,000 Royal Bank of Scotland credit card debt at 18.99% • £9,000 Capital One credit card debt at 3.00% • £15,000 Halifax loan debt at 4.50% In this example, the debt avalanche technique would have you pay off your RBS credit card debt first, then allow you to pay off your remaining debt in 11 months, paying a total of £1,011.60 in interest. The debt snowball technique would have you tackle the Halifax loan first, managing your debt in 11 months, but you would have paid £1,514.97 in interest. By switching the order of your debts, you can save hundreds of pounds in interest payments. For individuals with larger amounts of debt, the debt avalanche technique can also reduce the time it takes to pay off the debt by a few months.

Priority vs. Non-Priority Debts

Before you would commit to either debt repayment technique you would work out your income and then also take into account your priority and non-priority debts. This is vital as it is not advisable to ignore your priority debts such as council tax simply because it’s not interest-bearing. Ignoring priority debts may seem like a way of getting your debts paid quicker but are more like to result in serious consequences for you and your family if you stop paying your mortgage or rent.

Persistent Debt Caution

When you read up more on the debt avalanche and debt snowball techniques, it’s easy to get carried away with the idea of a debt repayment plan that can be self-managed, and that’s ok to feel that way. However, as these are largely American concepts, one major aspect you must factor in as a resident of Scotland is the rules around persistent debt. What’s persistent debt? You can find out more about persistent debt in Scotland but essentially, if you only make minimum payments for a period of 18 months on your credit cards, store cards and catalogues, your lender may suspend the service and ask for full repayment due to rules introduced by a UK regulatory body. However, you will be notified of this in advance and you may still be able to negotiate a debt repayment plan with the lender.

Debt Repayment Plan Advice In Scotland

Trust Deed Scotland® offer a confidential, non-judgemental debt advisory service that aims to help people in Scotland get themselves out of the severest of financial difficulties. A self-administered debt repayment plan such as the debt snowball or debt avalanche methods may be beyond your reach and a more formal debt management solution is required. In which case, we’ve helped over [volume] people in Scotland who were in a similar position and of those people, almost 3,000 left a debt advice review on the independent reviews platform Trustpilot. The difference between many of the companies advertised on Facebook or Google and Trust Deed Scotland® is that our advisors are based in-house and work directly with those who implement the solutions, ensuring continuity in your journey and that your details are not passed onto anyone else. We’re also experts in Scottish debt advice whereas an individual based in a call centre in the rest of the UK, or overseas may know as much as about debt help in Scotland as the piece of paper in front of them, also known as their sales script! And, as we have the correct authorisation and commitment to training and compliance – we’ll always have your best interests at heart. Some of those companies may attempt to sell you a solution that makes more sense for them, but it may not always be in your best interest. Get started today by trying our Trust Deed Wizard® tool or call us on 01412210999.

Debt Management Plan vs Debt Arrangement Scheme

Posted on by Craig Stocks
When you’re struggling with debt and looking for ways to get back to a level you’re comfortable with – you may be contemplating what informal and formal debt repayment plans are available to consider, and have seen companies offering a debt management plan. You may have already spoken to a Scottish Debt Expert and want some reassurance that you’ve made the right choice. A Trust Deed in Scotland is a way of managing debts and making a fresh start in as little as 4 years, with interest and charges frozen and then the unaffordable debts are written off at the end. However, another other formal solution exists in Scotland known as the Debt Arrangement Scheme, which isn’t available as an equivalent in the rest of the UK. yet. Therefore, when debt advice companies offer a debt management plan as a way of managing debts, they may not know the nuances of Scottish debt help solutions particularly well and may not be able to offer DAS as a solution to you. When weighing up a Trust Deed vs DAS, vs Sequestration or Minimal Asset Process, against each other – There are advantages and disadvantages, or risks and benefits to each that need to be assessed and understood in order to make a balanced and informed decision on what solution is best for the individual. However, when weighing up the Debt Arrangement Scheme vs Debt Management Plan, the advantages are overwhelmingly tipped in the favour of the Debt Arrangement Scheme. The Debt Arrangement Scheme is an official, government-backed scheme that helps people with a regular income and who are in debt, to repay what they owe over a longer period of time. An approved money advisor works with you to formulate a Debt Payment Programme (DPP) and this is presented to your creditors for approval. On the other hand, a Debt Management Plan is arranged and administered by either the individual themself, or a representative of a debt advisory organisation, and is an informal arrangement with creditors to repay the debt in full. Its informal nature introduces a range of issues that could ultimately result in an unsatisfactory, prolonged experience. Fixed-term arrangement A Debt Management Plan has no fixed end-point, and therefore, in theory, could continue for many years without conclusion. Your creditors may decide to add interest and other charges to the amount owed at any point during the arrangement, leaving you at risk of exposure to a seemingly endless period of debt repayments. The Debt Arrangement Scheme locks the payment arrangement into place, which not only gives you the benefit of having an end-date in sight, but also means the creditors can’t move the goalposts on their agreement and all of a sudden demand more money, or payment in full. Freezing internet and charges If you enter into a Debt Management Plan, you’ll find that most of your creditors would agree to freeze the interest, but they are not forced to do so by law. In practical terms, they could decide to continue to applying interest and charges on their debt at any time, and some may even do so from the start. When you apply for the Debt Arrangement Scheme and your plan has been approved – interest and charges are legally frozen and upon completion of your debt payment programme, these interest and charges are officially removed. Protection from creditors legal action In practical terms, it’s never typically in your creditor’s interest to take legal action against you to recover monies from you. However, when you’re in a Debt Management Plan, this is still an avenue that they are open to pursuing. As long as you comply with the terms and condition of the Debt Arrangement Scheme, you are legally protected from your creditors. Reduced creditors contact A creditor chasing payment over their debt can become a nuisance and it is always in their own best interest to chase you for as much payment as possible. In a Debt Management Plan, repayment is determined based on pro-rata amounts. Therefore if you owed the creditor £1,000, but the overall debt was £10,000 then that creditor would receive a pro-rata repayment of 10%. However, this isn’t guaranteed and every creditor has a different interpretation on what you spend your money on and whether that’s acceptable to them. With a formal Debt Payment Programme locked in, your creditors are bound by its terms and therefore communication from them will reduce as a result. Built-in protection mechanisms  When you’re in a Debt Management Plan, you may experience an unexpected change in your circumstances. Redundancy, family bereavement and long term illness are all potential ways that an individual can experience a drop in their income which can trigger creditor communication or legal action. The Debt Arrangement Scheme has the flexibility to legally arrange renegotiation of the original terms or a payment break of up to six months.

Debt Management Plan vs. Trust Deeds

The only solutions open to you in Scotland aren’t exclusively a case of Debt Management Plan vs. Debt Arrangement Scheme. There are both merits and downsides to alternative solutions including Sequestration and Protected Trust Deeds which makes it important that you seek expert advice which will, in turn, lead to you understanding how each of the solutions works and how they are likely to impact you. The Trust Deed lasts for a period of 4 years typically, after which can debt is written off upon completion and you can find out more about how do Trust Deeds works. If you would like to learn more about Trust Deeds, you can contact Trust Deed Scotland® on 0141 221 0999. Find out if you would qualify for a Trust Deed by using our unique Trust Deed Wizard® tool online.

What option for paying off debt is best for me?

Posted on by Craig Stocks
The best option for paying off debt that is right for you will invariably always depend on your personal circumstances. We have a free Scottish debt help guide that can be used to work out the differences between each solution and how they may be advantageous for you, plus the disadvantages of each too. It’s always our recommendation to seek advice from an experienced debt adviser, as they will give you the most informed view of which options are best for paying off debt in Scotland. You may recognise any of these 10 traits in yourself when you have unaffordable debts in Scotland, but that alone doesn’t automatically mean you’re in need of a formal solution for your debts.
  1. Paying non-priority bills like credit cards instead of priority bills such as your mortgage or rent.
  2. Borrowing money from family and friends.
  3. Using payday loans to keep yourself rolling over.
  4. Dreading receiving new bills because you know you can’t pay them.
  5. Running out of money within days of being paid.
  6. Your credit and debit card are declined at the shop till.
  7. Using your bank overdraft to get by month to month.
  8. Making minimum payments every month to your credit cards.
  9. Avoiding phone calls and visitors to your doorstep for fear of it being a debt collector.
  10. Pretending everything is ok when it’s not.

Where you can get help today

You can and should seek help from a qualified money advisor as soon as you possibly can. Trust Deed Scotland® can be reached between 9 am and 8.00 pm by calling 0141 221 0999 or you can use an alternative method to contact Trust Deed Scotland. If you owe money to your creditors and you’re starting to receive demands for payment through the post, or by telephone – try and stay calm. The letters are deliberately worded to cause urgency, fear or alarm, so much so that the UK government ordered new debt letter rules to make the letters less intimidating and reduce distress. If you are considering an option for paying off debt that feels rushed, as a result of a creditor pushing you into it – make sure that this isn’t the only motivation for applying for the solution. A good debt advisor will always give you transparent, balanced advice and leave the decision in your hands, at your own pace. If you’re not quite ready to proceed, you can apply for a Statutory Moratorium to give yourself breathing space of up to 6 months from your creditors.

Trust Deeds

An option for paying off debt in Scotland is a Protected Trust Deed. Learn more about what are Trust Deeds and how Trust Deeds work. As a formal, legislated solution, the Trust Deed helps thousands of people make a fresh start every year in Scotland. A Trust Deed typically lasts for 4 years in Scotland and can be used to manage unsecured debts such as credit cards and loans. Once in place, interest and charges are frozen, creditor contact will be reduced from payment demands to mostly administrative notifications such as statements – all of which will be managed by your Trustee. When you evaluate whether or not you feel that a Trust Deed is a good idea or not you for – consider all pros and cons and how they affect you on a personal level. It’s important to seek advice from a qualified money advisor such as Trust Deed Scotland® where you will receive tailored debt advice based on your circumstances.

Debt Arrangement Scheme

Repaying debts under the terms of the Debt Arrangement Scheme is a solution that is growing in popularity. Figures based on official 2018-2019 to 2019-2020 data show an annual increase of 23% for people using DAS to clear their debts and that’s before taking into account figures that are likely to be inflated due to the Coronavirus pandemic and its financial impact on households. When you apply for a Debt Payment Programme in Scotland and it becomes approved, like a Trust Deed any interest and charges will be frozen. Depending on how much debt you have and how much you pay, the length of time to repay may be quicker, or longer than that of the Protected Trust Deed. Regardlessly, you will have a fixed end date in mind, which may then be shortened depending on your affordability and whether your personal circumstances were to change in a positive way. Learn more about what is a DAS and the advantages and disadvantages of the Debt Arrangement Scheme as a potential option for paying off debt for you.

Minimal Asset Process vs Full Administration Bankruptcy

The Sequestration (Scottish bankruptcy) method is another option for paying off debt in Scotland. It’s possible that a creditor can petition for your bankruptcy and remove the decision from your hands, if this is a concern for you – give us a call on 0141 221 0999. Sequestration or Bankruptcy in Scotland arguably carries the greatest stigma, yet while it may be considered as a last resort for many, the reality is that it can be the most effective way of clearing your unaffordable debts and moving forward in life. The sequestration process is effectively divided into two categories – Minimal Asset Process and Full Administration Bankruptcy. There are setup fees usually for these two products, however, recent legislation changes to MAP Sequestration mean it is now free to apply for. With Full Administration Sequestration, those fees have reduced these fees to a lesser amount of £150, depending on the individual’s income. If you are in receipt of certain benefits, the Sequestration too may be processed for free.

An alternative option for paying off debt in Scotland?

There are other alternatives that can be viable options for paying off debt in Scotland including an informal Debt Management Plan, or a Debt Consolidation Loan. You can find out more about the differences between a Debt Management Plan vs. Debt Arrangement Scheme but essentially the main difference between one and the other, is that the DMP is informal and the DAS is formal. Debt consolidation is perhaps the most commonly known overarching term for all debt solutions available in Scotland. This can help create a view that the only way to manage debt is to borrow more money in the shape of a larger amount of money and then consolidate those debts down to one, either by using a credit card or a loan. However, while there are benefits to doing so, the reality is that finding funds at a favourable rate is less likely. More often than not, with a poor credit rating and a history of defaults – the only loans that may be made available to you are a secured loan against your property or a guarantor loan using someone else to repay the debt on your behalf. We tend to advise against both of these solutions, but given the right circumstances, you may feel different, or they may work for you. Call us on 0141 221 0999 to find out more about how we can help you consolidate your debts. Find out more about the differences between an unsecured loan and a secured loan.

Will Trust Deed Scotland® be able to help me?

When you seek help with your debts it can be a worrying time. It is a big step, one which Trust Deed Scotland® fully understands and undoubtedly, people may be worried about doing so. You may worry about the reaction you will get from a stranger, and you may fear that the people you are speaking to will be shocked, will disapprove or judge you. On top of that, there is a stigma surrounding the debt advice process itself. What does it involve and what do all these abbreviations all mean? Debt advisors should never be judgemental and should always advise you on what’s in your best interests, not their own. If you feel they are pushing you into a solution without properly explaining it, seek qualified debt advice elsewhere. You should NEVER pay to receive debt advice, and no solution should have upfront setup fees; other than those required directly for Sequestration, should you not be exempt from paying the £150 application fee for this. Trust Deed Scotland® feels proud of our debt advice reviews as they indicate how our customer feel about our service in their own words. With over [reviews] reviews on Trustpilot, we’re rated excellent in their Debt Relief category, and with more five-star reviews than anyone else – we’re the No.1 rated in the category as well. Call us on 0141 221 0999, or try our Trust Deed Wizard® tool to get started.

What is Zombie Debt?

Posted on by Craig Stocks
Halloween 2020 is set to look different than any other in Scotland with the Scottish Government asking us to avoid guising and thus help prevent spreading Coronavirus. Residents of Scotland with old debts beware: a forgetful moment from your past could results in old debts rising from the dead and coming back to haunt you. Zombie debt. So, as we’re at home this Halloween, we’ve put together a guide to help you understand more about what you’re options are. Helping you to avoid having a night of the living debt.

What are Zombie Debts?

Zombie debts are old accounts that may have been forgotten about and then either written off as ‘uncollectable’ and which have passed the time in which they can legally be collected. These can be anything from an old payday loan to a credit card debt. Even an old library fine. Depending on the type of debt and how old the debt may be, you may be in for a nasty surprise, or it may become unenforceable due to becoming a Prescribed Debt, known more commonly across the UK as Statute Barred.

Are my statute barred debts written off?

A regulatory body say that it’s not fair for a creditor to keep asking you to pay a statute-barred or prescribed debt if you’ve told them you don’t intend to pay it. In Scotland, If the creditor waits too long, the debt will become prescribed. Once a debt is prescribed, the law says it no longer exists so there’s nothing more the creditor can do collect it. This is outlined as part of the Prescriptions and Limitation (Scotland) Act 1973. Statute barred debt in England refers to a debt that’s not enforceable because the time a creditor has to chase payment has passed. This is outlined under the Limitation Act 1980. In England, Wales and Northern Ireland where under the Limitation Act 1980, a creditor has six years to chase most unsecured unpaid debts or twelve years for some mortgage shortfalls. This ‘limitation period’ starts from the time of your last payment or acknowledgement of the debt, not the total length of time you’ve been making payments. The Limitation Act 1980 act states that when all of the following conditions are met a debt cannot be enforced:
  • The creditor has not registered a CCJ against you (Known as a Decree in Scotland)
  • You have not made a payment in the last six years (or with joint debts, the other person)
  • You have not admitted the debt in writing in the last six years
  • Where it’s a mortgage shortfall, the latter two restrictions are doubled to 12 years.
For most types of debt in Scotland, the prescription period is 5 years. Mortgage capital shortfalls have a longer prescription period of 20 years for the money that you borrowed while the interest charged on this has a prescription period of 5 years. Council tax and overpayment of social security benefits are also subject to a prescription period of 20 years. If your creditor has already started action to obtain a Decree before the prescription period passed, the debt can’t become prescribed.

How did I get a Zombie Debt?

Zombie Debt comes in many forms, including legitimate debts that have been forgotten or ignored, Identity theft cases and I.T. errors. The most common way of this happening is a combination of change of address, change of telephone and changed bank details. With no little way of knowing, we assume the debt has been paid and eventually may believe that we paid it off. If you have built up a zombie debt and forgotten about it, don’t feel bad about it – it’s an easy oversight to make. But, if you have forgotten about a debt you are protected from harassment or any other contact from the creditor. You cannot be pursued through the courts, as the debt is deemed to have either been abandoned or repaid. It involves unsecured credit from credit cards, store cards and the likes of council tax arrears. It does not apply to secured debt such as mortgages and money owed to the government for income tax, property tax, fines and student loans.

Help with unexpected debt?

If you have unaffordable debt, whether it’s from an old Zombie Debt, or more recent – You should always look for expert debt help in Scotland. You can find out more about Trust Deed Scotland and find out why we’ve become the No.1 rated company in Trustpilot‘s debt relief services category. If you are struggling with debts, we’re here for you. You’re not alone. Find out more about what is a Trust Deed in Scotland or about what trust deeds do, call us today on 01412210999 for friendly, non-judgemental advice.  

Are Credit Cards included in Scottish Trust Deeds?

Posted on by Craig Stocks
All types of unsecured debts are required to be included within a Scottish Trust Deed and credit cards are the most common type of debt that is included in Trust Deeds and alternatives such as the Debt Arrangement Scheme.

What are Credit Cards?

Credit cards and store cards are both used to purchase goods and services on credit in the same way that a catalogue accrues a debt, or a personal loan, bank overdraft and so on. A debit card is different to a credit card as it relies on finds being active in an account. Credit cards may be issued by your bank or building society, or other financial services provider. A credit facility may be provided by a high street store for example, more commonly referred to a store card.

Are Credit Cards a problem?

We’re a nation of credit card enthusiasts. The Money Charity reported in July 2020 that the average credit card debt per UK household was £2,238 in January 2020. Credit cards are convenient and handy. They’re useful for travelling and in some cases, they do offer greater protection for purchases and reclaiming where a transaction has resulted in a poor buying experience. Chargebacks themselves are really useful. A chargeback is a refund prompted by your card issuer. If you paid for a product or service with a credit card, you can dispute it through the card issuer and let them take the dispute to the merchant. If the issuer succeeds where you failed, the purchase price is refunded to the credit card you charged it on. However, as credit cards become more readily available, and the numbers of people relying on them continue to grow, defaults are becoming more common. Store cards carry with them a different level of threat. The store card may seem like its a loyalty card, being used to open with an immediate discount. However, with little room for competitive rates, the interest rates are often unfavourable, to begin with, and comes with the added temptation in the form of buying there and then, in the store.

How to manage Credit Card debt?

If you have a temporary payment problem, contact the card issuer to discuss this. They may offer some short-term flexibility and with payment breaks being replaced with ‘tailored’ solutions as a result of Coronavirus recommendations made by UK regulators. If you haven’t defaulted on your credit cards and have a great credit rating, you can shop around for other credit cards which allow interest-free balance transfers. Caution should be used when examining the small print. Credit card lending is done based on risk. The more of a risk you are, the worse the interest rate you are likely to achieve as a result. Will you be able to afford new lending terms over the longer term. However, if like many thousands of other households in Scotland, your money issues are more serious, it’s best to get expert debt advice. A qualified money adviser can take a look at your situation, advise you of the options and allow you to make a balanced decision. Solutions for credit card debts in Scotland may include the Scottish Trust Deed, Debt Arrangement Scheme or Sequestration.

What is a Scottish Trust Deed?

The Scottish Trust Deed is more formerly known as a Protected Trust Deed and is used to consolidate debts over a typical period of 48 months. It’s a government legislated debt solution that allows an individual to freeze interest and charges, pay back a more reasonable amount to their debts and protect assets such as a home or car. There are disadvantages too such as an impact on your credit rating. When you have unaffordable debts such as credit card debts, the Scottish Trust Deed solution may work for you.

Alternatives to a Scottish Trust Deed?

The Debt Arrangement Scheme is a solution that also allows you to legally freeze interest and charges, stop creditor harassment over non-payment and gives you a fixed time frame for when you will be able to repay the debt. When evaluating your options – we recommend speaking to a qualified money advisor and that will allow you to receive tailored advice depending on your circumstances. In addition to the Scottish Trust Deed or DAS, you may consider Bankruptcy as a way of managing your debts. Sequestration and Minimal Asset Process are the two forms of bankruptcy that are used in Scotland, and while they may carry the severest of impacts to a credit rating and come with a natural stigma attached to them – They are an effective way of clearing debt.

Help with Credit Card debts in Scotland

We’ve helped over [volume] people in Scotland, became the No.1 rated with more Trustpilot debt advice reviews than anyone else in Scotland. Every week, our experienced debt team give hundreds of people non-judgemental and confidential advice. Call us on 0141 221 0999 or learn more about Trust Deed Scotland today.

Talk Money Week 2020

Posted on by Craig Stocks
Trust Deed Scotland® urges people to open up about personal finances in support of Talk Money Week • Talk Money Week 2020 (9-13 November) encourages people to have more open conversations about their money and pensions • Talking about money more important than ever amid ongoing financial impact of Covid-19 • To get more people talking money Trust Deed Scotland® will be running awareness activity across social media during Talk Money Week. Trust Deed Scotland® has announced it is taking part in Talk Money Week, an annual awareness campaign run by the Money and Pensions Service to encourage everyone to open up about their money and pensions. Also see Talk Money Week 2021.

When is Talk Money Week in Scotland?

Held from 9th to the 13th November, Talk Money Week aims to reduce the stigma around money by encouraging conversations among families, friends, neighbours, customers, colleagues and communities. Talking openly about money can have a huge impact on managing money worries, and is important for our overall health and relationships. The impact of Covid-19 has made it more important than ever to start conversations about money to look after our financial wellbeing. Talk Money Week is also an annual opportunity to celebrate the work organisations are doing to support the UK Strategy for Financial Wellbeing, launched by MaPS in January 2020, which has ambitious ten-year goals to help everyone make the most of their money and pensions. Throughout the week there will be activity in Scotland to get more people talking about personal finance issues, and engaging with topics such as saving regularly, planning for retirement, dealing with debt, and teaching children and young people about managing money. As part of the week, Trust Deed Scotland® will be running awareness activity across social media during Talk Money Week.

Trust Deed Scotland® commented:

“We encourage our clients to openly talk about their debts where possible. Even by sharing their experience with other clients on Trustpilot where other people with unaffordable debts can learn about their experiences in their own words. Debt is still a great taboo and the stigma attached to have debt problems means many people attempt to struggle on alone. We’d like to remind anyone who has a debt problem that they are not alone. We’re here for them. Our team of friendly, non-judgemental advisors can help individuals take steps to improve their lives for the better.” Stephanie wrote recently about her experience with Trust Deed Scotland® “Massive weight off our shoulders. We had built up alot of debt and maxed out our credit cards. We were paying an extortionate amount every month and couldn’t keep our heads above water. I was nervous about calling but I’m so glad I did. Spoke to a lovely lady called Danielle who made me feel so at ease. She managed to sort us out on a 48 month payment plan and got a lot of our debt written off so we’re now paying less than half than we were and even managed to protect our car payments and keep our car. It’s great to finally feel like we’re not fighting a losing battle and in a few short years, we will be debt free and have a fresh start. Wish we had done it sooner.” For more information on Talk Money Week visit www.maps.org.uk/talk-money-week/

Help from Trust Deed Scotland®

Let’s talk about debt today. Contact Trust Deed Scotland® on 0141 221 0999 or browse through our Scottish Debt Solutions. With our experience of having helped over [volume] people in Scotland and by becoming the No.1 rated debt company in Scotland with over [reviews] five star reviews, our team has helped people from all walks of life. Our advice team are:
  • Friendly
  • Non-Judgemental
  • Empathetic
  • Experienced
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