Category: Debt Advice

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.

Help With Unaffordable Debts In Scotland

Posted on by Craig Stocks
When looking for help with unaffordable debts in Scotland, and you have unsecured debts over £5,000 – You can find out more about Trust Deeds and whether one may be right for you. The Debt Arrangement Scheme is a solution for many people in Scotland also and is possible for those with debt levels below £5,000 and above £5,000 as well For those with the most severe financial difficulties in Scotland – the Minimal Asset Process is an option for those who are facing Sequestration but have either no income or a low income. In addition, they have little, or no assets. In order to make a decision on the right Scottish debt solution for you, we would always recommend talking to a qualified money advisor. You may not need help with unaffordable debts in Scotland when you have one or two individuals debts, and you haven’t missed any payments and it’s possible that the creditors can be contacted with a simple self-negotiated debt repayment plan. However, if you feel your debts have become unaffordable then these questions may help you drive your decision.
  • Are you being harassed by creditors?
  • Can you no longer afford to pay any more than the minimum payments?
  • Are you missing payments to priority bills in favour of your non-priority bills?
  • Have you exhausted all other realistic means of paying back your debts?
If you have answered yes to most of these questions, then it’s likely that you are going to need more formal help with your unaffordable debts. Call us on 0141 221 0999 or find out if you qualify for debt help.

Help with unaffordable debts in Scotland and inspirational stories

Some people may put off getting help with unaffordable debts in Scotland due to the stigma attached to having debt, and feelings of shame and embarrassment. In our debt advice reviews, we hear many positive comments from our clients, who speak warmly about the friendly, non-judgemental advice that they receive from our advisors. In August 2020, K McDonald wrote “Soreena has been amazing. Never judged me and have helped out so much. For the first time in many months, I’ve been able to have a full night’s sleep. I can’t thank her enough for all her help” Another client, Neil, who reviewed us and gave us a 5/5 rating and wrote “A very friendly, experienced company who helped myself out with financial difficulty. Trish was excellent, non-judgemental, and put my mind at ease all the way through the process. Highly recommend to anyone whos feeling the pressures of financial strain.” Briony wrote a review saying “Vicky was amazing! Such a weight off my shoulders, I have been worrying about my debts for a while and was taken through my options when I decided what would be the right decision for me I was helped through it all She was so understanding and polite amazing service.” Kristopher wrote a review saying “At a very difficult time they gave great advice and made a very hard embarrassing phone call easier and my advisor Matthew stayed in touch with me every day to keep me updated.” Holly, writing a review about our advisor Jacqueline commented “Lady that assisted me was very helpful and easy to talk to would highly recommend this company.” Whenever we speak to or clients, we encourage them to have a look through our reviews when they are seeking help with unaffordable debts in Scotland. Not only are we proud to say that we’re the No.1 rated company in the debt relief service category of Trustpilot but also it helps people to understand that they are not alone, not only in a sense that we’re here for them at the other end of a phone, but also that many other people were going through the exact same rollercoaster of emotions; stress, depression and anxiety and have since come out the other end saying things like they feel a weight from their shoulders, or that they can sleep at night. For a brighter future, trust us. If you do something about your debt today, you can stop worrying about it tomorrow. Call 0141 221 0999 to get started, or try our online debt repayment calculator tool, also known as the Trust Deed Wizard®.

Are there age limits for applying for a Trust Deed?

Posted on by Craig Stocks
There is no official upper age limit for applying for a Trust Deed or the Debt Arrangement Scheme. However, there are some important factors that need to be considered as part of the overall qualifying criteria. More older people are finding themselves with unexpected debts than ever before.  As people age, the chances of age-related redundancy, chronic illness and death of a spouse increase, which then can impact their ability to pay off their debts. Furthermore, pensioners are a group that are more likely to keep problem debts to themselves and suffer on alone. Having trouble with debt in retirement is becoming more common, with more retirees struggling to deal with credit cards and other unsecured debts. Research by Key Equity Release found that in January 2020 almost 32% of their clients in Scotland had released equity to pay off credit card debts, personal loan debts and bank overdrafts. While there is no formal age limit for applying for a Trust Deed, a person’s ability to repay the debt needs to be considered. A regular contribution shall be required for a typical period of 48 months therefore, in order to qualify for a Trust Deed, an income such as a private pension may be used to pay monthly contributions. However, in order to be considered for the Debt Arrangement Scheme, a state pension may be included when calculating what your affordability may look like. When it comes to finding debt help in Scotland, you need to review your circumstances and then make a decision based on what works best for you, and based on a reasonable understanding of the options open to you, and how those translate into meaningful outcomes that will help you get your debt back down to an affordable level.

Alternative debt solutions for Pensioners?

For those with a state pension as their only income, then a Minimal Asset Process may be more beneficial – or as mentioned above, the Debt Arrangement Scheme again may be a more viable alternative solution. The truth is that for those looking to understand the age limit for applying for a Trust Deed, the advice remains the same regardless of your age, your debt level, or how much you think you can afford to repay.  In all cases, you should seek expert debt help from a qualified money advisor. As Scotland’s leading Trust Deed company with [reviews] reviews on Trustpilot and by having helped over 25,000 people in Scotland – Trust Deed Scotland® are in a position to give non-judgemental, friendly and confidential advice. Our experienced advisors regularly talk to people from all age groups, and all walks of life on a daily basis.

Ways of increasing your income when retired

You may wish to consider other ways of managing your debts without needing formal debt help in Scotland. Carry on working – if you’re fit and healthy then a part-time job may keep you busy and allow for more money to come in. Downsizing – If you’re in living in a house that has more bedrooms than you require, then this may to create a lump sum and then has an additional benefit of reducing maintenance and heating bills. Check your benefits entitlements – Investigate the benefits that you are receiving and find out what you’re entitled to. In order to receive certain benefits, then you need to claim them.  You may therefore be entitled to extra money without realising it. Check your pensions entitlements – You can consider a pension consolidation service using Zippen. Auto enrolment workplace schemes have been widely publicised and promoted. What is seldom explained is what happens to that pension when we move jobs throughout our careers. Cost and the fear of the unknown may stop many of us from asking the question or seeking advice but with Zippen estimating that throughout our working lives, UK residents may have up to 11 different jobs, which potentially means 11 different pension pots containing income that may had previously been forgotten about.

What’s the minimum age for a Trust Deed?

The minimum age to apply for a Trust Deed is 18. It is typically unlikely that a person would find themselves with so much unaffordable debt in order to qualify for a Trust Deed. Credit agreements legally require an individual to be eighteen plus. The Debt Arrangement Scheme similarly is open to 18-year-olds and above, just like with Trust Deeds, it would be unusual for an individual who is so young, to have built up a significant debt level to qualify. However, with the impact of Coronavirus hitting the 18-24 age group the most across retail, leisure, travel and hospitality sectors, coupled together with a growing irresponsible buy now, pay later lender culture created by the likes of Klarna, there are a growing number of individuals within this age group that do require debt help than there would be under usual conditions. Likewise, with anyone who needs debt advice in Scotland – people find themselves with unaffordable debts for a variety of reasons, and our advisors are never there to judge you. Only to help you by providing debt advice and solutions, tailored to your individual needs.

Applying for Debt Help online

Regardless of your age – if you are experiencing financial difficulties you should look to get help as soon as you possibly can. You can contact Trust Deed Scotland today on 0141 221 0999, or find out more about Trust Deed Scotland and what makes us a good choice when you’re applying for debt help online. Use our Trust Deed Wizard® and get started today.

Is your home blacklisted if you start a Trust Deed?

Posted on by Craig Stocks
A concern for some of our clients is whether their home is blacklisted if they start a Trust Deed. Only individuals have a credit rating. Your credit rating is personal to you and the property itself is not ‘blacklisted’.
  • As a homeowner, your property is not blacklisted.
  • As a tenant, your landlord’s property is unaffected. This is also true of any housemates that also reside in a property.
  • If you’re married, or in a civil partnership – The other party in the relationship is not affected by your credit.
  • If you live with your parents, they or any other family members are not affected either.
However, if you have joint borrowing, joint accounts, or a guarantor loan for example, in this instance the responsibility to pay the debt falls onto the other party. In which case, if the debt isn’t paid, then that would impact their credit rating. You can find out more about Do Trust Deeds affect a spouse or partner. These myths exist partly because of mistruths online but also because debt collection agencies use this is a threat to demand payment, using any means necessary. When we have unaffordable debts, it’s only natural to worry about how our own finances affect those around us and together with the stigma attached to having debts, this creates a toxic perception of how bad the situation is. The fear of a home being blacklisted as a result of our own actions and our own unpaid debts is enough to deter many individuals in Scotland from seeking help over their debts. If you are putting off getting help because of how you think it may impact those around you then we suggest having a read through our [volume]+ Trustpilot reviews, where many people talk about the same kind of fears and how they found the strength to do something about their debts. As we often say to our clients – If you do something about your debt today, you can stop worrying about it tomorrow. We’ve previously written about your credit score and debunked credit score misconceptions.

Does a Trust Deed affect my Credit Rating?

There’s no getting away from the fact that starting a Trust Deed, a Debt Arrangement Scheme or Sequestration will have a detrimental impact on your credit rating. It will take a while to rebuild your credit rating once the solution has been complete meaning that obtaining credit will become harder, and interest rates will not be favourable. However, with careful planning – many people have gone on to get mortgages after a Trust Deed has ended. A clear signal that a negative credit score can be overcome. When you are researching whether a Trust Deed is a good idea, then a credit rating may be an important factor for you. Where possible you can consider fixing your credit rating without having to consider a formal debt solution. You could consolidate debts using a loan or additional credit facilities. However, we would always advise against about borrowing your way out of debt and would instead suggest that you discuss your circumstances with a qualified debt advisor in order to find out what your options are. Getting yourself further into debt in order to protect the home being blacklisted, while meant with great intentions, isn’t required and will almost always result in a bigger problem with your debt further down the line.

Do I need to tell my landlord about my Trust Deed?

No. your landlord does not need to be informed about your debt repayment arrangements. However, should you wish to take on a new tenancy with a different landlord, a credit search may be undertaken. Firstly, we’d advise you to be upfront about it before you approach the new landlord or letting agency for a new tenancy. Secondly, if you have already been served default notices and missed payments – consider your credit score in this instance. Whether you have unaffordable debts, or not – you should never pay non-priority debts over priority debts such as a mortgage or rent. if you have a good record of never missing a rental payment then you can, of course, use this as proof that you are a reliable tenant.

Getting help with debt in Scotland

You can get debt advice in Scotland today by calling Trust Deed Scotland® on 0141 221 0999. Our qualified debt advisors have been helping people out of debt since 2009 and over twenty thousand people have been able to enjoy a brighter future thanks to the solutions we’ve put in place for them.

Can I get a Trust Deed if I live in England or Abroad?

Posted on by Craig Stocks

The Protected Trust Deed and Debt Arrangement Scheme are two formal debt management solutions available to people who are residents of Scotland.

However, you can still enter into a Trust Deed if you live in any other country of the United Kingdom when you have lived in Scotland at any point in the last 12 months.

This isn’t limited to people currently living inside the UK’s borders. Scottish ex-pats living in the EU and anywhere else in the world can still apply for a Trust Deed as long as they’ve lived here in Scotland at any point in the previous 12 months.

This rule differs from the Debt Arrangement Scheme, which unfortunately is not possible unless you are a current resident of Scotland.

Every week, Trust Deed Scotland® deal with similar enquiries from former Scottish residents now living in countries such as Australia and Canada as well as mainland Europe and in most cases, we can help those individuals deal with their debts at home in Scotland.

I’m originally a Scottish resident living in England. Can I do an IVA rather than a Trust Deed?

If you are a former Scottish resident but now living in England then yes you can enter into an Individual Voluntary Arrangement.

We recently wrote about the differences between IVAs and Trust Deeds and should you be in the unique position where you have lived in Scotland in the last 12 months and eligible for both solutions then there are some key difference between the 2.

Arguably the biggest difference is that a Trust Deed has a typical duration of 48 months compared to the IVA which lasts a typical duration of 60 months. For anyone in this position, you may find this to be a significant point of difference to consider but in reality, apart from this significant point – there are more similarities than differences between a Trust Deed and an IVA.

Applying for a Trust Deed in the EU?

While the on-going saga that is Brexit continues to be negotiated, a Trust Deed is unaffected by any situation that may, or may not be created as a result of Brexit negotiations.

The Trust Deed is an answer to your finances back in Scotland and has absolutely no connection with European legislation.

One difference is the new debts that you may accrue in the new country – if you have credit cards, loans or any other type of unsecured debts then these would not be included in your Trust Deed. It may be possible that an equivalent solution exists in the new country. For example in Germany, you may investigate Schuldnerberatung options.

However, even in English speaking countries such as the United States, Trust Deeds have a completely different meaning for example in the US, a Deed of Trust which relates to Real Estate.

If you do have unaffordable debts in the new country, you should seek local, qualified advice.

Will my debts follow me abroad?

Although your credit history in the UK may not follow you when you move abroad, any debts you owe will remain active. It will be difficult for lenders to take legal action against you if you’re living in a new country outside the United Kingdom, but it is not impossible for them to make an attempt to recoup the debt.

Why do I need to pay my debts off in Scotland if I have emigrated?

While it may seem possible to abandon debt in Scotland when you move abroad, apart from a moral responsibility to deal with the debts then arguable the biggest reason to make sure your debts have been dealt with is in the event that you want to return to the country with a decent credit rating.

Furthermore, while mostly an unlikely outcome, your lender may still employ a tracing agency to locate you in your new country. Though as mentioned above, it would be difficult for them to pursue legal action against you in a country where they have no jurisdiction.

More commonly – you just may find that you are unhappy in the new country for whatever reason. Ill health, redundancy and many other changes in your circumstances may bring you back home quicker than you expected.

Some people who move abroad may use a relative’s address as their UK contact address, and while it’s a myth that an address is blacklisted, rather than an individual – without mail redirection, some may find that final demand letters, calls and doorstep visits are a nuisance to their relatives back home, where their address has been used as the last known address.

If you plan on moving back to Scotland, those debts will still apply and might also lead to a decree being issued awhile you were away or your Sequestration. If you have assets here in Scotland, a debt collector or sheriff officer may try to secure a debt against them on behalf of the lender. If you still work for the same company who are based in Scotland, then a wage arrestment can still be applied for.

Creditors may be able to bankrupt you in the new country. Bankruptcy is recognised across borders in most European countries and many other countries across the world are signed up to international agreements where their courts or insolvency services will cooperate.

At the very least, default notices will be served against you which will result in a significant impact on your future creditworthiness.

Applying for a Scottish Trust Deed

The good news is that you can start your application for a Scottish Trust Deed online abroad, anywhere in the world.

If you’re looking for debt advice regarding your debts at home while you’re living abroad, you can contact Trust Deed Scotland and make us aware of your current location and difference in timezone and we’ll arrange a call back to discuss your debts at home. Or, you can call us on +00441412210999 from abroad.

Debt Arrangement Scheme Reviews

Posted on by Craig Stocks
Alongside Trust Deeds, the Debt Arrangement Scheme is a formal debt management solution that takes advantage of Scottish government legislation to offer individuals and businesses a way out of debt in Scotland. Trust Deed Scotland recently reached a milestone of over 10,000 Trustpilot reviews and whilst many of those reviews were for the Protected Trust Deed solution, a growing number of those testimonials are also Debt Arrangement Scheme reviews. The Debt Arrangement Scheme is a formal solution that is superior to an informal Debt Management Plan in many ways, however, we always recommend discussing your circumstances with a qualified money advisor in order to understand your circumstances and provide you with balanced debt advice that is tailored to your personal requirements. You may then weigh up whether or not if a DAS is worth it, in the same way that you may ask yourself Is a Trust Deed right for me?

Debt Arrangement Scheme reviews on Trustpilot

Michael wrote of his DAS Scotland experience: “I watched an advertisement on the television for Trust Deed Scotland® and thought I would go to their website and see if they could help me with debt problems. By filling in a simple form first on the Trust Deed Scotland website I got the ok for contact to be made by phone to talk about all my debt options and how a debt agreement to my creditors can be achieved. The people I have talked to at Trust Deed Scotland® are very good at explaining what the best options in my situation were. Things are progressing ahead now step by step until an agreement is signed by all parties and hopefully take a big weight off my shoulders about my debts .” das reviews Mags, who also entered into the Debt Arrangement Scheme through Trust Deed Scotland® on wrote on Trustpilot: “This company has saved my life. I didn’t know where to turn to. So kind and understanding of my situation and so easy to deal with. Trish was the first person I spoke to and she was great. Reassuring and so friendly. I’m still paying my debts but interest is frozen and I’m paying what I can afford” das reviews John, another client who entered into a DAS Debt Payment Programme wrote: “I cannot thank Peter enough for the help and support he gave throughout this process. Absolute first class.”

How do I apply to join DAS?

If you think that a debt payment programme through DAS might be the best option to help you with your debts, you need to get help from an approved money adviser such as Trust Deed Scotland. You cannot apply for a DAS by yourself. As an approved money advisor, we have been authorised by the Accountant in Bankruptcy (AiB) to apply for debt payment programmes on our client’s behalf through DAS. The first thing that an approved money adviser will do is to look at all your circumstances and help you to decide on the best debt repayment option for you.

Can I take out further credit in a DAS?

You can get up to £2,000 credit whilst you are in a debt payment programme under the terms of the Debt Arrangement Scheme in Scotland, unless you already owe £1,000 on debts which are not included in the Debt Payment Programme. You need to be able to afford the ongoing payments to repay the new credit on top of your agreed DAS payments. If you cannot, your debt payment programme could be revoked. You are also permitted to get credit if one of the following special circumstances applies to you.
  • You need credit because you are responsible for reasonable funeral expenses.
  • You are also allowed to get credit if one of the following special circumstances applies to you.
  • Your DAS Administrator approves your credit and your debt payment programme is varied to help you to repay the extra credit.
  • You need credit for emergency repairs to your home.
  • Your credit was taken out before you joined DAS and was part of a cyclical loan agreement.
  • You incur a trade debt in the ordinary course of business.
You must tell the new creditor if you are in a debt payment programme currently and you get credit due to one of these circumstances. You will be expected to pay this at the agreed contracted rate. Your debt payment programme may be varied to take this into account.

Can I end my DAS early?

Your money adviser can ask creditors to accept less than the full amount of the money that you owed them when you started the debt payment programme. This is called offering a ‘composition’. If all your creditors accept this, it will end your debt payment plan and you will have no more to pay. This option is available to repay your debts early in a DAS to individuals and to sole traders, but it is not available in a business debt payment programme. An offer of composition can only take place after: You have paid 70% of the amount that you owed when the debt payment programme started; and You have made payments for a full 12 years (not including any payment breaks). Your DAS money advisor will record which creditors agree to the offer of composition. If a creditor does not respond to the offer within 21 days, they will be added to those creditors who agree to the composition. If all creditors (including those creditors who do not respond) accept the offer of composition, the money advisor will write to you to confirm that your debt payment plan has ended and they will tell your creditors. But, if all of your creditors do not agree to the offer, your DAS money advisor can still arrange a composition and alter your debt payment plan. They will take account of the agreements received and make a variation. Where a continuing money adviser is handling the administration of your case, they will write to confirm the result of the decision.

Apply to the Debt Arrangement Scheme

There are advantages and disadvantages to the Debt Arrangement Scheme, alongside the other main debt solutions in Scotland and you can get more advice on all solutions open you and apply for the Debt Arrangement Scheme by trying out our DAS Wizard tool. You can also call us on 0141 221 0999.

Can you get a Trust Deed twice?

Posted on by Craig Stocks
The advice on whether you can get a Trust Deed twice varies depending on the reason for you asking the question of can you have 2 Trust Deeds. For example, you may have entered a Trust Deed several years ago, completed your Trust Deed term successfully, rebuilt your credit and then have the misfortune to end up with unaffordable debts for the second time in your life. This isn’t unheard of in Scotland, where we’ve had a series of recessions over the last couple of decades, and of course, people can suffer ill-health or changes to their circumstances more than once in their lives. Or, you have entered into a Trust Deed and for whatever reason, it hasn’t worked out for you and you’ve been discharged, then you may be looking at getting a Trust Deed twice for another reason.

Getting a Trust Deed twice when you’ve already successfully completed a previous one

Legally you are able to apply for a Trust Deed twice without any time limit. Your creditors would still vote on the Trust Deed in the same way as they did on the first arrangement. One advantage perhaps if you’ve been through the process already, is that you’ll have a better understanding of how it works, knowing what happens when a Trust Deed completes. There is still a stigma attached to having personal difficulties that may have stopped you seeking help quicker than you did the first time around, and should you reach the point where you need help again, this may be playing on your mind. We’re all now aware of the lifechanging ‘act of god’ that became the Coronavirus pandemic and as the country recovers, many will need to deal with the impact of debt, irrespective of however they may have been handling their finances previously.

Getting a Trust Deed when your last one failed

The other reason for asking if you can get a Trust Deed twice is when you’re in the situation of already being in an existing Trust Deed that has failed or is failing. In this case, you can enter into a second Trust Deed, but you must have been officially discharged from the first Trust Deed before you enter the second arrangement. Your chances of success on the second Trust Deed depend on factors individual to yourself, including the history of repayment during the first Trust Deed, how much debt was written off at the end, and your current level of debt. If a Trust Deed does break down for whatever reason, it’s important for you and your debt expert to understand all the reasons why your Trust Deed failed. If for example, you are unable to afford the contributions set out originally or felt pressurised to enter a Trust Deed rather than Sequestration or DAS, due to a lack of awareness of other options, or due to the perceived stigma attached to bankruptcy. Trust Deed Scotland® have been advising on Scottish residents on the risks and benefits of the Trust Deed and also the advantages and disadvantages of the Debt Arrangement Scheme and any other solution that you may be eligible for. We’re aware of some organisations who may push individuals into a Trust Deed, sometimes by proposing an unrealistic payment plan. This tactic may benefit the organisation but does nothing for the client’s long-term prospects of a brighter future. Formal debt management solutions, whether formal or not, should ultimately have the exact same objective; to help you manage your debts to the best of your ability and to help you move on with your life.

Can I switch from a Trust Deed to another solution?

You can, only if discharged from your Trust Deed, explore other solutions that you feel may benefit your circumstances better at that point such as Minimal Asset Process bankruptcy. Again, it comes down to what suits you best based on your own personal circumstances and the reasons you’re looking to be discharged from the Trust Deed. It may not be easy to get yourself discharged from a Trust Deed depending on your Trustee’s interpretation – ultimately you’ve made a commitment to resolve your debts using a formal solution, which is unlike a utility bill arrangement for example where you simply just cancel one provider and switch to another. It is in both your own and your Trustees interest to find an amicable solution and should you be worried about your ability to repay your debts then you should speak to your current Trustee as soon as possible, and find out what options they are willing to offer you. This is another reason why it’s best to get qualified debt advice from a leading debt company such as Trust Deed Scotland® where we will always work with you to provide you with balanced, expert advice that results in you understanding the solutions being offered to you and how they will impact your financial future.

Where can I get advice on getting a Trust Deed twice?

Trust Deed Scotland® have been advising Scottish residents on the disadvantages and advantages of Trust Deeds since 2009. In that time, we’ve given over [volume] people a route to a brighter future and gathered over [reviews] five star reviews on the independent reviews platform TrustPilot where we’ve become the number one company in the debt relief service category.

Can I include a Bank Overdraft Debt in a Trust Deed?

Posted on by Craig Stocks
Yes, you can include a bank overdraft debt in a Trust Deed. In fact, not only can you include a bank overdraft debt in your Trust Deed, but the outstanding balance will automatically be included as one of your creditors. Sometimes clients that we speak to believe that a bank overdraft isn’t a real debt. Perhaps because they service the debt on a regular basis, as their wages and other income go into the account, it may take at least a couple of weeks before it either starts to become partially overdrawn, or more commonly, reaches the authorised overdraft limit. Bank overdraft debts are one of the more common debts types that will be included in a Trust Deed or DAS (Debt Arrangement Scheme), alongside credit card debts, unsecured loans and many others.

Bank overdrafts are an expensive way to borrow

You may consider that the bank overdraft facility is like a financial buffer for you, a very convenient form of borrowing but it’s feasible that the bank can request full payment of the bank overdraft debt at any time ‘upon demand’ And, most crucially for people who are already struggling with their finances, an overdraft can become a very expensive form of borrowing with penalties and high-interest rates. Research from Compare the Meerkat in August 2020 found that almost 33% of us are relying on an overdraft to get us through the Coronavirus pandemic. The average amount owed on their bank overdraft debt is in excess of £500. In June 2019, UK regulators introduced new rules on overdraft lending to help stimulate a fairer, simpler and more transparent overdraft market. In reality, the move to help people who have bank overdraft debts ultimately backfired as the likes of Lloyds, Barclays, Royal Bank of Scotland, HSBC, Halifax, Clydesdale Bank and others hiked-up their interest rates to almost 40% and up to 50% in some cases. However, since these new rules only started during lockdown when they also instructed banks to offer interest-free overdrafts, many customers of banks may not yet realise that the costs for using an arranged overdraft will be even more expensive than using credit cards.

Payment breaks coming to an end

Where people in Scotland are still furloughed, or have been made redundant and are already taking advantage of payment breaks, replaced by tailored support; expenditure may suddenly become overwhelming. If you are in a payment break that is due to end, our advice is to contact your lender(s) and ask what options you have for tailored support. If you have unaffordable debts in addition to your bank overdraft debt then we would also advise you to speak to a qualified money advisor such as Trust Deed Scotland®. In order to apply for a Trust Deed, all unsecured debts must be included and it is normal that if you bank with a provider who is also a lender, then you will need to open a new bank account with a lender whom you do not owe any money to. The good news is that it’s very easy to open a new basic account while in a Trust Deed, with a number of options open to you. Find out more about the best bank accounts for Trust Deeds. If you have a joint account, then you will need to remember that the other party becomes fully responsible for payment of that debt.

Can you get a new bank overdraft when a Trust Deed has ended?

Yes, once you have completed your Trust Deed, you will be free to start rebuilding your credit again and after a period of credit rating rehabilitation, you will be free to apply for a bank overdraft again. It’s true that bank overdrafts can make our day-to-day lives much easier. An unused bank overdraft may seem like the best option in the event of the ‘rainy day’ that may occur. But there is incontrovertible evidence that bank overdraft debts can once again develop due to poor affordability checks, which become self-regulated. No sooner, have you started to encroach your overdraft limit, than other debts such as credit cards, loans and the cost of living itself can sometimes put you in a precarious position.

What’s the difference between an emergency fund and a sinking fund?

For clients of Trust Deed Scotland® who have gone on to enjoy a brighter future, most often they will take the monthly contribution that they had paid into their Trust Deed and instead create a savings accounts that will be used as an emergency fund and a sinking fund. Essentially an emergency fund is what it sounds like. An allowance to cover a sudden emergency such as car repairs, anything that was unexpected. A sinking fund is more a way of budgeting for expenditure that we know will occur. These may be one-time purchases such as a new computer, or phone. A car, or a deposit for a home. Events such as weddings and graduations, or recurring expenses such as car insurance or Christmas. The added benefit of creating a savings account instead of an overdraft is that you will accumulate interest on the amount. Research online and find a savings account that suits your circumstances. While the easy answer may appear to be the account that offers the higher rate of interest, in real terms, these savings accounts are offered with penalties for early withdrawal etc, so always do your homework on them before committing.

Help with bank overdraft debt in Scotland

If you’re worried about bank overdraft debt in Scotland, or indeed any other type of debt – you can contact Trust Deed Scotland today for qualified advice. We offer expert debt help in Scotland and have helped over [volume] people in Scotland since 2009. Thousands of people have left debt advice reviews where our clients tell us in their own words that our advisors are friendly, non-judgemental and that our advisors were able to find a solution to their debt problems quickly and efficiently.

What is MAP Sequestration?

Posted on by Craig Stocks
The MAP Sequestration is more formerly known as Minimal Asset Process and it is a form of sequestration in Scotland. Sequestration is the Scottish term for bankruptcy. The MAP solution was introduced in 2015 and was previously known as the Low Income, Low Asset bankruptcy which essentially describes it’s qualification criteria. The MAP is the nearest Scottish equivalent to a Debt Relief Order. The other type of Sequestration in Scotland is known as Full Administration Sequestration. Bankruptcy has always carried a greater stigma to it, not just here in Scotland but through the world. However, there really needn’t be as many more people struggle with their finances and require its use to get control of their finances again, working towards a brighter journey.

Benefits of the Minimal Asset Process

  • Most unsecured debts are included in MAP Sequestration
  • You can apply for MAP when you have a total debt level of £25,000.
  • Although MAP Sequestration is a formal legal process, you won’t need to appear in court
  • You’ll usually be discharged from your MAP Sequestration after six months, after which most debts will be legally written off
  • Once your MAP Sequestration is approved your creditors can’t chase you for payment or add more interest and charges to your debts, and they can’t take any court action

Risks of the Minimal Asset Process

  • Your credit rating will be affected for six years from the day your MAP Sequestration begins
  • Your bank is likely to close or freeze your accounts and you may only be able to get a basic bank account
  • Sequestration can impact some jobs or may lead to termination of employment
  • Some private landlords may evict tenants or not renew a tenancy agreement if you become Sequestrated*
  • Some debts, such as student loans, court fines ad child-maintenance are not included
  • If you are self-employed, Sequestration could make it harder to trade and obtain credit for goods and services

How has Coronavirus affected Minimal Asset Process Sequestration?

Following the coronavirus (COVID-19) pandemic, new legislation was brought in to change some of the MAP Sequestration eligibility criteria. The Coronavirus (Scotland) (No. 2) Act 2020 has made some changes which, while small in number, are significant. These are: The financial threshold of maximum debts owed has been increased from £17,000 to £25,000 The application fee to apply for Minimal Asset Process has been reduced to £50 and some fees has been waived for those on certain benefits * The Coronavirus (Scotland) Act 2020 protects tenants in Scotland from any eviction action for up to 6 months.

Where to get MAP Sequestration advice

Many companies that advertise on Google and social media concentrate purely on Trust Deeds as opposed to alternative Scottish debt help solutions including MAP sequestration and the Debt Arrangement Scheme for arguably self-motivated interests. This may seem like it’s more difficult to get qualified advice and assistance in applying for MAP Sequestration. At Trust Deed Scotland® we’ve always aimed to offered Debt Help in Scotland that is transparent, balanced and we’ve always put our clients at the forefront of the decision-making process. As such, we have our client’s best interest at heart. If you want to discuss your options, you can always find non-judgemental, confidential advice from us. Contact Trust Deed Scotland® today on 0141 221 0999. You can also get free MAP sequestration advice from organisations such as Money Advice Service, an independent service set up to help people manage their money.

Minimal Asset Process alternatives

When considering which option is best to help you manage your financial difficulties, you may also qualify for a Trust Deed, or you may be outwith the MAP Sequestration qualification criteria and therefore more likely need to apply for Full Administration Sequestration. There may also the option to apply for the Debt Arrangement Scheme as your best way forward. If you have reviewed your options for clearing debt in Scotland and found that the only solution that can help you is in fact MAP Sequestration, then don’t be put off this applying for this solution as they exist to help people with the severest of debt in Scotland. In the years 2018-2019 and 2019-2020, just over 3,800 Scottish individuals were declared bankrupt each year. Of this figure, just over 2,000 were awarded Minimal Asset Process bankruptcy. You are not alone. In 2018-19 there were 7,915 registered Protected Trust Deeds and this rose to 8,743 in 2019-20. Likewise, in 2018-19 there were 2,636 Debt Payment Programme applications received under the Debt Arrangement Scheme and 3,495 DAS Applications in 2019-20. When weighing up your options, it may be possible to be coerced into considering one solution over another. That coercion may come from an unqualified debt advisor, or within your own social circles – or hearsay within forums and groups. However, although mostly well-meaning, the truth is that you should always first seek expert money advice from a qualified money advisor, and that way you will receive tailored advice that suits your own circumstances. Call 0141 221 0999 today if you want to find out more about the advantages and disadvantages of MAP bankruptcy and alternatives.

What’s the differences between secured and unsecured loans?

Posted on by Craig Stocks

What is the difference between a secured and an unsecured loan?

  Find more articles like this in our Info Hub – A secured loan means that you borrow a sum of money and put up something of value as security – usually your home. Therefore, an unsecured loan is unattached to any asset that you own. When you get a loan from a bank or a loan from a credit union – they are typically unsecured loans in the same way that credit cards, catalogues and bank overdrafts are also unsecured lending types. Two other types of unsecured loan types are payday loans and guarantor loans, both of which have come under heavy criticism in recent years for mis-spelling. Lastly, another unsecured loan is a student loan – The student loan repayment arrangement varies due to the particular payment plan you are on. A secured loan against a car is usually refered to as a logbook loan and some ‘rent-to-own’ lenders exist(ed) such as Brighthouse, allowing an individual to purchase goods on a secured loan basis. With a secured loan, if you do not keep up the payments, the lender can sell the item used as security, even if that means leaving you homeless. With an unsecured loan debt, if you don’t keep up the payments, the lender can take action in the courts to get the money back. More commonly, and before it gets to that stage – they will serve a default notice against you as per the terms of Consumer Credit Act of 1974. A default will impact your credit rating and more likely result in them passing the unsecured loan debt onto a debt collection agency to collect on their behalf. If it does end up in court, you will usually be ordered to pay off the loan in regular instalments set at an amount the court decides you can afford. The lender can use a range of other measures if you do not make the payments in line with the court order. It is more common for local authorities to pursue you for enforcement actions such as wage arrestments in Scotland, however, this is very far down the line of non-payment of your unsecured loan debt. If you currently have an outstanding wage arrestment claim issued against you, you can investigate the use of a Statutory Moratorium to buy yourself more time and give you some breathing space. If the wage arrestment has already been processed and your employer is taking a deduction from your wage – give us a call on 0141 221 0999 and we’ll review your Scottish debt help options with you. The APR% of a secured loan is usually more favourable than an unsecured loan because lenders run fewer risks of not getting their money back. An unsecured loan will generally cost you more, but there’s no danger of losing your home if you can’t keep up the payments.  

What Are Debt Consolidation Loans?

  Debt consolidation loans are a single loan taken out to replace your other debts, however, are they the best option available for restructuring your finances? Taking out a consolidation loan when you are already in severe debt might not be the best option for you. You may need to consider other aspects. Think about: Cost: Is the interest rate very high? Will the new debt consolidation loan really save you money? Security: Is the loan secured against your home or car? If so, you could risk losing your home/vehicle if you fail to keep up the payments on the consolidation loan? Other existing debts: Make sure the consolidated loan covers all your existing debts except those which have a lower APR than the consolidation loan. Otherwise, you could find yourself having to pay back loans you had forgotten about at a time when you have already overcommitted yourself by paying back the debt consolidation loan. New debts: Once you’ve consolidated your loan, don’t build up new unsecured debts elsewhere. Cut up your credit cards so that you can’t use them.  

Secured vs Unsecured Loans – How much is too much to borrow?

  Before taking on any new borrowing from an unsecured loan or a secured loan, think carefully about whether you will be able to afford the new repayments on top of your existing ones and think about what would happen if your circumstances changed. To help you do this, draw up a budget taking into account how your income and spending are likely to change over the lifetime of the loan. Also look at how much you will pay back in total – multiply the monthly payment by the number of payments –  You may be shocked. Recalculate your budget as if you had already taken out the loan. Do the results now suggest you’ll run into problems? Calculate the effect of a change in interest rates on your mortgage. Think carefully before you borrow more to try to get out of a problem. A new loan may appear to help for a time but will make matters worse if you run into problems repaying that loan too. Check out budget and loan calculators to understand the real impact of your borrowing. And get advice to help you sort out the root of the financial problem.  

Debt Consolidation without borrowing?

Depending on your situation and how much you owe – it’s possible that an unsecured loan or secured loan may not be the best way of managing your unaffordable financial difficulties. If you reside in Scotland and have unaffordable debts; you may qualify for the Debt Arrangement Scheme. The DAS in Scotland uses government legislation that allows you to enter into a formal debt management solution which freezes all interest and charges. Find out more about the advantages and disadvantages of the Debt Arrangement Scheme. In addition to the Debt Arrangement Scheme, if you owe more than £5,000 to two or more unsecured creditors, you may qualify for a Trust Deed, which also uses legislation to write off some of your unaffordable debt and allows you to enjoy a brighter future after a typical period of 48 months. Find out more about the advantages and disadvantages of Trust Deeds and how Trust Deeds work. Depending on the severity of your financial difficulties – you may also qualify for Sequestration – the Scottish insolvency equivalent of Bankruptcy. There are pros and cons to each but the outcome has the same goal; affordable debt repayments that allow you to put your financial difficulties behind you. In order to make sure you’re given the best advice on debt consolidation with our without further borrowing, we would always advise that you seek expert debt advice. Trust Deed Scotland® can be reached on 0141 221 0999 or you can contact Trust Deed Scotland via an online enquiry form, email, or in person* however, we recommend trying our Trust Deed Wizard tool to start the process as your first step. After a confidential phone call with one of our qualified debt advisors, we will be able to explain the pros and cons of all available solutions and provide you with a personalised illustration of what your options are, and how much you would be able to reduce your monthly repayments down to. *When lockdown restrictions allow this to be done so safely. May not be suitable for all. Can affect credit rating. Free advice also available from moneyadviceservice.org.uk