Scottish Debt Advice

Posted by Sony Dewan | 7:39 AM | | 0 comments »

In the US and the UK there are no government debt management plans in the sense that the government get directly involved in providing direct help with your debt problems. However, a government can legislate to put systems in place that make it easier with people with serious debt problems to avoid the usual route of bankruptcy.
In England, Wales and Northern Ireland there is a scheme called an individual voluntary arrangement or IVA. In Scotland where many of the laws are different, the government introduced something called a Trust Deed, which is very similar to an IVA in terms of how it works.

The Trust deed can be seen as an indirect government debt management tool, in that it was brought in to help Scottish people to get out of very serious debt situations without having to file for bankruptcy, or sequestration as it is in Scotland. It allows you to make payments towards your debts for a fixed period of time, and at the end of that period any debts remaining unpaid are written off.
For people in Scotland who are really struggling with debt, the Trust Deed is a real lifeline that allows them to become debt free again in a relatively short period of time. The Scottish government have provided a system that is even more advantageous for the person in debt than the IVA is. You make payments for a shorter period of time and you only need the agreement of two thirds of your creditors for the Trust Deed to be binding on the rest. This compares with 75% of creditors which is the requirement for an IVA.
The government had a very specific purpose in setting up the Trust Deed as a debt management tool, which was to give people an alternative to the very damaging option of bankruptcy and all the lasting consequences that it entails. For this reason Trust Deeds are aimed at people in very serious situations, so there are certain requirements in order to be eligible for this kind of help.
To be able to set up a Trust Deed, you need to have unsecured debts of £12,000 or more to a few different creditors. Unsecured debts include credit cards, personal loans, payday loans, store cards, etc. This compares well to the £15,000 of debt that the UK government requires you to have to get an IVA. While you are less likely to lose valuable assets such as your house when you set up a Trust Deed, you cannot include in the deed any secured loans such as arrears on your mortgage.