Get out of debt and stay out of debt

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Get out of debt and stay out of debtDebt can overwhelm you if you let it get out of control. Unfortunately it’s what most people do as they either don’t realise they have a problem or don’t want to admit they have a problem and they leave it too long before taking action.

In this article we highlight the classic signs of debt problems and what to do if they appear and you do in fact have a problem.

The signs that indicate a debt problem

No rocket science here, the signs are pretty obvious and on their own on the odd occasion do not necessarily mean you have a debt problem but taken together and happening on a regular basis would mean you almost certainly have a problem.

Here’s what to look out for:
Can you only make your minimum payments to your cards every month?
Do you have a reasonable idea of how much debt you owe?
Have you recently been refused credit of some kind?
Are you struggling with essential bills?
Are cheques and direct debits bouncing and are you incurring penalty costs?
Do you have more going out than you have coming in?

If you find your answers to these questions are not what they should be then you need to take action to solve your problem before it gets worse.

Look for professional debt advice

It’s the sensible thing to do. Experienced debt advisors will listen to your problem, make an assessment and present you with a range of the best options for you to consider. Getting face to face advice, or even over the phone is the best way to find the solution that will suit your own circumstances.

Remember that experienced debt advisors have seen it all before and they just want to help.

There’s a wide range of debt solutions

A debt management plan enables you to agree a reduced payment with your creditors which you pay back over a longer period of time.

A debt consolidation loan will pay off all your other debts and you only then have one monthly payment to one lender.

The debt arrangement scheme works on a similar basis to a debt management plan but is a formal and legal agreement between you and your creditors to repay your debts at a rate you can afford, albeit over a longer time period.

A trust deed is a Scottish debt solution that allows you to agree an affordable monthly payment with your creditors which is usually for three years and you can then write off the balance of your unsecured debt. Scottish trust deeds are administered on behalf of the Government by the Accountant in Bankruptcy.

Bankruptcy or sequestration as it is called in Scotland is a solution where you just cannot afford to pay off your debts and allows you to write off what you can’t afford and make a fresh start.

Take action now

The important aspect to all of this is to take action. If you don’t it is likely that your debt problems will get worse. If you do and you take professional advice you can start to improve your financial situation and get on the road out of debt.

Debt help for all: resolve your problems now

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Debt helpDebt problems and financial difficulties have no boundaries and affect a wide range of people. The working class, middle class, unemployed, millionaires and well known celebrities are all susceptible to the clutches of debt and the misery it can bring.

News abounds about the falls from grace of many high flying business owners and famous media figures and there are many thousands in the well-off middle classes and professions who find themselves struggling with debt. Data shows however that debt problems are heavily skewed towards lower income earners as financial swings have a greater impact on their disposable income.

So no matter who you are you can find yourself at any time experiencing debt problems and requiring help. The important aspect to all of this is to ensure you seek help when the problems occur and don’t wait hoping it will resolve itself.

Take action now

Make a start now on finding a solution whether you think your debt is small, temporary or more serious. Sit down and work out how much you owe across the board on loans, overdrafts, mortgage, credit cards and store cards. Take a separate note of your monthly payments for each of these.

If you can, you should also do an income and expenditure statement detailing your total income and normal living expenses and outgoings along with your debt repayments as already mentioned. Information on financial planning can be found here Wikipedia personal finance.

This gives you a financial snapshot of where you are at and enables you to start considering a solution to your problems.

Seek professional debt help

If you think you have a debt problem then you probably have and the best thing to do is to get professional debt help. If you find yourself struggling with your normal monthly outlays and debt payments, direct debits are being returned unpaid or you find yourself having to use your credit card when you know you should be paying it off then you are likely to have a debt problem.

Address the problem as early as possible and enlist professional debt help and advice to assess the extent of the problem and find a solution that suits your particular circumstances.

Debt help and assistance

Debt help is available to all and although every debt problem is unique and specific to an individual’s set of circumstances the range of solutions available is the same and the process of resolving the problem is very similar.

Don’t be embarrassed or concerned about the reaction you may receive as you are likely to find that experienced debt advisors will already have seen most of the problems out there, so they will not be surprised by your problems. You will also find that trained debt advisors are there to help and will be professional and understanding in their interaction with you.

The best debt advice is advice that is tailored and specific to your own particular circumstances and so you should not be attracted by gimmicks such as debt calculators or online assessments. The key is to speak to an expert advisor who can consider and assess your circumstances and give you experienced and proven debt advice.

The new debt arrangement scheme (DAS) for debt problems in Scotland

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dasThe debt arrangement scheme (DAS) is a debt management solution which enables people who are experiencing debt problems to enter into an arrangement with their creditors to reduce their repayments by paying back over a longer period of time. With many people struggling with debt in Scotland, DAS is an effective option that gives people additional time to resolve their problems.

How it works

This is a formal debt solution tool which offers both a route to resolving debt problems and protecting people from the pressures and demands of creditors. Interest and charges are frozen as part of the process and written off once the arrangement comes to a close. The borrower enters into a debt payment programme and makes a single regular payment to an authorised DAS administrator who then distributes the payment to the creditors.

The scheme is backed by the Scottish Government and controlled through the Accountant in Bankruptcy.

An effective debt option

Assistance and relief is often needed to help people find the debt solutions they need and the debt arrangement scheme is a proven and effective method to do this.

Although it is controlled through the Accountant in Bankruptcy, DAS is not bankruptcy. It is a formal and legal agreement but in the end is a simple method of reducing debt payments by extending the repayment period. The scheme itself takes account of people’s disposable income and can last for as long as all parties agree is an acceptable time period. People would normally repay the full amount of their debt through this scheme.

The Scottish Government is keen on this scheme as it not only protects the debtor but also helps to ensure the creditors receive the funds they are due. By making it more accessible to people they hope to bring debt resolution and relief to as many people in Scotland as possible.

How does a Scottish Trust Deed work?

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Scottish trust deedA Scottish trust deed works by helping people who are experiencing difficulties with their loans and credit card payments. Your debt in relation to your income must be at a level where you are genuinely unable to repay what you owe to your creditors in a reasonable period of time. If this is the case then you may qualify for a trust deed and be able to take advantage of this effective solution out of debt.

How do I qualify for a Trust Deed?

If you are a tenant or homeowner and live in Scotland (including living with parents) then you have already met part of the criteria. You must have, in most instances, debts of over £4000 which are owed to at least two creditors. You also need to have a degree of surplus income that will enable you to make the payments required under the terms of the trust deed.

It is possible to apply for a trust deed even if you have an impaired credit history which can include County Court Judgements since, because there is no new borrowing undertaken with this debt solution, a credit search is not required.

There are restrictions to be aware of in terms of employment as there are some employment terms and conditions that prevent employees from entering into a trust deed. Some financial institutions and public bodies actually prohibit people from holding particular positions if they have a trust deed.

What is the trust deed process?

A trust deed is a legally binding document and as such is administered by a licensed insolvency practitioner (IP) who becomes the Trustee. The Trustee assesses your financial circumstances with a view to ascertaining how much you can reasonably afford towards your unsecured debt.

The Trustee is responsible for negotiating and agreeing the terms of the trust deed. This would normally take the form of a single monthly payment which is reduced to a level you can afford for a period normally up to thirty six months. You would make your agreed payment to the Trustee who then splits it and pays the appropriate amounts to your individual creditors on your behalf.

At the end of the three year period any outstanding debt is written off and you then become debt free.

What is a protected Trust Deed?

This is an important part of the process as it is only when the trust deed becomes protected that there is a legally binding agreement that your creditors must abide by. Protection status also means that your creditors cannot take legal action against you. In order to become protected the Trust Deed proposal must be accepted by a majority of the number of your creditors who represent over one third of the total value of your debt.

How do I apply?

We always recommend that you seek professional debt advice in relation to all debt problems but particularly so with a trust deed as this presents a serious situation with important considerations for your future. There may be alternatives to be considered and it’s important to have this information to ensure you make the best decision possible.

By E-P Debt

The importance of professional debt advice: New Bankruptcy and Debt advice Scotland Bill (2013)

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Professional debt adviceA new Bankruptcy and Debt Advice Bill is being introduced by the Scottish Parliament which is designed to bring a new balance of fairness to both debtors and creditors for formal debt solutions. The first stage of the Bill is expected to be completed by the end of this year (2013)

The Bill has been constructed to transform and update the management of debt and formal debt solutions in Scotland. It takes account of recent changes in the economy and the credit industry and looks to improve the management of debt problems and solutions for all.

The Bill’s key objectives

The Bill has at its core, three main objectives designed to facilitate the debt management process and strike what it terms a fairer balance between the interests of debtors and creditors.
These objectives are:

  • To ensure there is a fair and reasonable process for people experiencing debt problems to gain access to debt advice and appropriate debt relief solutions.
  • To ensure people who can pay their debts do so and there are new procedures and controls to enable this.
  • To ensure that creditors get the best return on what they are owed by striking a new balance between the interests of the debtor and creditor in all instances.

The Bill provides provision for improving the debt advice and information to be made available to those experiencing debt problems and even goes further by introducing the concept of mandatory education, for example, for people who have been made bankrupt more than once.

A more efficient and streamlined process

Part of the Bill has focussed on the processes involved in the initial and on-going administration of the various formal debt solutions available to people with debt problems. Application processes have been improved and the Accountant in Bankruptcy (AIB) has taken on increased responsibilities and now administers much of the process.

The AIB also has increased responsibility and power to review decisions before appeal to the Sheriff Court, is now able to transfer debtors across the different debt solutions more easily and has access to procedures to reopen a case for a debtor to make new financial contributions.

The increased importance of debt advice

Debt advice takes on a central role with the new Bill and it is important for people to be fully aware of the implications of the new legislation. Independent advice is a crucial aspect to ensure the interests of the debtor in the first place are fully recognised and taken account of.

Any debt solution will now be assessed with new criteria that will seek to strike a new balance between the debtor and the creditor to ensure the organisations who are owed money secure the best return on the outstanding debt.

People experiencing debt problems have an increased responsibility now to seek advice early in order to ensure agreements are reached with their creditors before the problems get worse. This may enable people to utilise other debt solutions for example in order to avoid bankruptcy.

E-P Debt provides free and expert advice across Scotland on all debt solutions available to people in financial difficulty. You can speak to an experienced advisor in total confidence and discuss your problem to find out what your best options are.

By E-P Debt

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