Dealing with debt
Most of us have debt. It is a fact of modern life. Normally this does not cause a problem.
Many people, however, find themselves in debt, which they find difficult to repay at certain times. For some it's just a passing problem, but others may never be able to pay all that they owe.
Most people can and want to pay, they just need a bit of help and some extra time. The earlier you start thinking about dealing with your debt, the better it will be.
A good starting point in understanding your debt situation is by taking StepChange Debt Charity's 60 second debt check. The 60 second debt check is a quick and easy free tool which will give you straightforward advice based on your circumstances.
Don't bury your head in the sand. The sooner you seek advice the better.
What should I do?
If you can pay your debts, you should speak to your creditors before it is too late to make arrangements to pay.
If you cannot pay, or are finding it difficult to pay, speaking to your creditors can still help.
The agencies detailed below may be able to provide advice and assistance:
Money Advice Scotland
0141 572 0237
Citizens Advice Scotland
0845 450 0351
Money Advice Scotland and Citizens Advice Scotland can tell you how to contact an advisor in your area.
Stepchange Debt Charity
0800 138 1111
0808 808 4000
You can also get free debt advice from agencies in your area :
You can also consult a solicitor or financial advisor, however they may charge a fee. If your circumstances allow you may qualify for Legal Aid.
What legal steps can creditors take against me?
Your creditor can go to court to enforce the payment of your debts. There are several ways they can do this including:
This means that money or goods held by a third party are 'frozen'. The most common example is arrestment of funds in your bank account. The third party (eg a bank) may then be required to hand the property (funds) over to a creditor.
2. Earnings Arrestment
If you are working, the money you owe to a creditor can be taken from your wages/salary directly. Your employer will deduct a percentage of your net salary (after tax and deductions) every pay day and pay the money deducted directly to your creditor.
This means that goods held by you, eg a car, are 'frozen'. Anything that has been frozen ('attached') can be sold at auction. The money raised is then handed over to the person (creditor) who is owed the money.
Inhibition allows your the person whom you owe money to (creditor) to prevent you from selling, transferring or re-mortgaging your house or land unless you pay your debt to them. It does not allow your creditor to sell your property but remains in effect for up to 5 years.
Dealing with your creditors and debts
Money advisers can discuss the options available to you to deal with your debts. You must not ignore your creditors or your debts. Take action as soon as possible and there may be ways to improve your situation. These can include making informal arrangements with your creditors, entering the Debt Arrangement Scheme or setting up a trust deed. You can also apply for your own bankruptcy.
What is Bankruptcy?
Bankruptcy is sometimes called sequestration in Scotland. Bankruptcy has serious consequences for you. It will affect your credit rating for several years and may make it difficult to access credit or bank accounts in the future.
Bankruptcy can also lead to the loss of your home, savings, assurance policies and other articles of value, as well as creating difficulties for some forms of employment.
How can a money adviser help me?
There are many ways to deal with debt. Money advisers can look at your individual circumstances and help you decide what is best for you. They can help you decide if you are able to make any payments and help you negotiate with your creditors. They can assist you or represent you at court hearings. They can also advise you on ways to maximise your income and how to deal with emergencies, for example, if your bank account is frozen.
A booklet entitled “Debt and the Consequences” is available from:
The Accountant in Bankruptcy
0845 612 6460
Also online at: www.moneyscotland.gov.uk
The Accountant in Bankruptcy also publishes
information regarding bankruptcy, trust deeds
and the Debt Arrangement Scheme.