The Debt Arrangement Scheme: Scotland’s Formal Repayment Plan

Most people who are struggling to pay their debts want to deal with them, but don’t know how. They lose sleep over them, they worry about them, and often they try and fix the problem by borrowing more, but just make their situation worse.

Dealing with your debts, however, doesn’t need to be painful or stressful. Getting advice can make a world of difference. Under Scots Law there are a number of solutions available that can help people manage their debts. One example is a relatively new scheme that has been created by the Scottish Government called the Debt Arrangement Scheme.

The Debt Arrangement Scheme from Your Debt Expert is a repayment system which allows you to repay all your debts by making one affordable payment each month. It also freezes all interest and charges on your debts and prevents your creditors from taking any enforcement action against you. It’s not a type of personal insolvency, so it doesn’t involve your home or other assets and even where your creditors object to you entering the scheme, their objections can be overruled.

To apply for a Debt Arrangement Scheme you must first seek advice from an approved money adviser or a licensed insolvency practitioner. They work with you to get an accurate picture of how much money you have coming in and how much you have going out. They will then work with you to find an affordable amount for you to repay to your creditors each month.

They will discuss with you all your options and if you are able to repay your debts within a reasonable time (normally under 10 years), they will help you make an application to the Debt Arrangement Scheme.

Your creditors get three weeks to respond to the offer you make and if they don’t respond within those three weeks they are deemed to agree to it. If any of your creditors object in that time, thenyour application is passed to the Debt Arrangement Scheme Administrator, a Scottish Government Officer, who decides if your proposal is fair and reasonable. If she believes it is, she can approve your scheme and disregard the objections of your creditors.

Once you are in the scheme you make just one affordable payment each month to a payment distributor who pays your creditors for you. If you circumstances change you can normally increase the amounts you’re paying and sometimes can even reduce it. Where you lose your job or your income drops by 50%, you can apply for a payment break, giving you up to six months where you don’t need to pay anything to let you find a new job and resume payments.

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