Protected trust deeds are only available to residents of Scotland that are in financial difficulty with debts over £6,000 and meet specific criteria.

Provided you have maintained all of your trust deed payments, you will be free of all unsecured debts within 4 years.

Trust deeds are voluntary agreements between you and your creditors (the people you owe money to). You agree to repay part of what you owe them. A trust deed will normally include a contribution out of your income for a specified period; this is usually 4 years but can vary.

As such, you may qualify with £6,000 or more debt from 2 or more creditors.

Will my credit rating be affected?
Yes, by entering into a trust deed, you will no longer be repaying debts at the originally agreed amount, this means your credit rating will be affected for six years.

A record of the trust will be held on your credit file for up to six years following completion.

Benefits

Have a fixed term, up to 4 years.
Stop letters and phone calls from your creditors.
Prevent you from being made bankrupt / sequestration.

Considerations

You will be tied into the agreement for the full term.
Your details will be recorded on the insolvency register.
You will not be able to get additional credit of more than £500 without your supervisor’s consent.
Homeowners will need to look into releasing equity from their home.
Your credit file will be affected for six years.
Certain debts will still be outstanding, there will be restrictions on expenditure, lenders do not need to approve the PTD and if the PTD fails, could face sequestration and interest that was suspended could be added to their debt.

A debt management plan is an informal arrangement so payments can be changed to meet your circumstances. What this means is that Debt Management providers come to an arrangement with your creditors to repay your debts, but at a rate which you can afford. They do this by looking at your income and expenditure and coming up with a realistic payment plan that is good for all parties – your creditors get paid in full and you can repay your debts without struggling for food or warmth. If your situation changes and you can afford to pay more (or less) you can change your payment amount quickly and easily. Alternatively if at any point you decide you no longer need to be on a debt plan you can cancel at any time, although you will still have any outstanding debt with your creditors. In many cases Debt Management providers can even have any charges and interest frozen, although there is no guarantee that the creditors will agree to this. A Debt Management plan is not a solution we administer in-house.

What are the debt management fees for?
Your monthly debt management fee will pay the daily administration of your plan, the assistance from an expert agent, setting up communication with your creditors, payment of postal fees and phone calls, requesting that interest and other charges be stopped and providing you with an annual review of your financial situation.

How do you set up a Debt Management Plan?
We will refer you out to a debt management company who will conduct a full financial review of your accounts and determine a monthly affordable payment. They will then communicate directly with your creditors on your behalf, and develop a repayment plan. Once the plan is in place, all you will need to do is make one monthly payment. We will always recommend you speak to The Money Advice Service for free & impartial money advice before requesting to be referred to a debt management company.

Can I pay off my debts early?
A debt management plan, unlike an IVA does allow you to pay off debt early. As a non-legally binding agreement, you will be allowed to use pay raises or other sources of income to make larger payments and relieve yourself of debt sooner.

Benefits

Your plan is flexible so payments can be changed to meet your circumstances.
If you complete the plan, your unsecured debts will be cleared.
Making one regular monthly payment allows you better control over your finances.
Peace of mind – in many cases, you will no longer be contacted by your creditors or debt collectors.

Considerations

Creditors don’t have to agree to a debt management plan and may still contact you asking for immediate repayment.
Mortgages and other ‘secured’ debts are not covered by a debt management plan.
Obtaining credit in the future could be problematic since your credit rating will be affected for 6 years
Your debts must be repaid in full – they will not be written off.
Paying over time may mean the amount you pay is increased

Debt Arrangement Scheme
A debt arrangement scheme (DAS) is a debt management program, run by the Scottish government, which allows you to repay your debts over an extended period of time whilst providing you protection from their creditors, your credit rating will be affected.

What is a Debt Arrangement Scheme?
A Debt Arrangement Scheme is set up by the government and only available through a Debt Payment Programme. It is a debt solution available to Scottish residents who are struggling with debt but want to avoid bankruptcy. As a more formal debt payment plan that is not bankruptcy, this plan consists of one low monthly payment distributed by a DAS administrator to all of your creditors.

Who is a debt arrangement scheme suitable for?
To be eligible for a DAS you must be struggling to make your monthly debt repayments and also meet the criteria below.

Live in Scotland.
Have sought debt advice from a DAS approved adviser.
Wish to repay your debts without the threat of creditors taking legal action.
Have some disposable income following deduction of normal household expenses.
You must not be involved in another formal insolvency procedure at the time of application, such as:

Protected trust deed.
Bankrupt or subject to a bankruptcy restrictions order or a bankruptcy restriction undertaking.
Your DAS application only includes one debt and you are subject to a time to pay direction under section 1 (time to pay directions) or section 5 (time to pay orders) of the Debtors (Scotland) Act 1987.
The DAS application only includes one debt and is subject to a time order under section 129 (time orders) of the Consumer Credit Act 1974 (d), in relation to that debt.
You are paying a debt(s) under a conjoined arrestment order. If a creditor (whether the creditor is involved in the conjoined arrestment order or not) has tried lawfully to enforce another debt that is owed, then you may be eligible to apply for DAS.
If you live in Scotland and would like more information on a debt arrangement scheme visit www.dasscotland.gov.uk