Debt Management and Scottish Debt: What The Statistics Mean

If you compare and contrast them, debt solutions in the majority of the UK aren't as good as the solutions that have been put in place in Scotland. Despite the fact that politicians should be applauded for giving Scottish citizens a helpful range of problem-debt resolution methods, insolvency figures in Scotland are two times that recorded in the rest of the UK.

A Scottish trust deed generally lasts for a period of three years; in other regions of the United Kingdom the broadly-equivalent IVA debt strategy tends to last around five years. Scottish residents also have far better access to sequestration and bankruptcy than their other UK counterparts. In all other regions of the UK the type of outcome enabled by a Certificate of Sequestration in Scotland costs £700, meanwhile, in Scotland, it is a mere £100, rendering it easier for Scotch debtors to escape their unfeasible debts. Policy makers in Scotland look to have developed and maintained a system of debt solutions for Scottish people that stands up impressively well against the schemes in the rest of the UK.

At the same time the quantity of debtors applying for sequestration or a protected trust deed in Scotland has increased whilst insolvency in different regions of the United Kingdom is reducing. The most recent set of data included the 2nd highest quantity of Scots going into a protected trust deed ever. Are Scottish or UK government officials to blame for Scotland facing personal debt issues on a level not recorded elsewhere in the UK? Wouldn't debt-related efforts be better concentrating on prevention rather than cure?

Yet blaming the Scottish government for taking on the 'wrong end' of debt isn't fair. In actuality Scotland has lower quantities of average debt than most areas of the United Kingdom (excluding Wales). This means that there is not more debt, but there are more residents equipped to handle the debt that they actually have.

Regularly, unemployment is seen as a central factor in debt problems, is this the root of Scotland's high use of trust deeds? Possibly not. This is because:

-There is minimal difference between UK unemployment figures and those for Scotland
-The United Kingdom in general and Scotland on its own have very similar hourly pay rates
-Mortgages and property expenses are equally not to blame, they are far lower in Scotland

So why are protected trust deed and debt arrangement scheme numbers on the rise? It would appear the economic situation in Scotland, for which politicians are also responsible, is not disproportionately organised to drag Scottish people into debt compared to other regions of the United Kingdom. Who, or what, is creating the issue?

Thousands upon thousands of people in the rest of the United Kingdom are thought to be in debt management plans for which no reliable stats are reported. Would these people have used a protected trust deed with a three year term when a five year IVA just felt too long? Have debtors north of the border been helped to get on with sequestration because a £100 charge is feasible whilst a £700 cost cannot be saved up? Are residents in Scotland opting for the (measured and reported) debt arrangement scheme as opposed to an 'English' DMP that brings few of the positives of the Scottish DAS?

At this juncture, the most plausible answer isn't that Scotland is being hit by a worse insolvency problem, but that Scotland is much better at dealing with the situation directly than the rest of the UK. It is plausible that more debtors would make use of debt management solutions in the United Kingdom if they were more accessible.

Dealing With Personal Debt in Scotland

One particular debt solution, the trust deed, has been marketed especially heavily in Scotland. Debt and trust deed advisers often hear from clients who simply wish to know whether or not they qualify for a trust deed. In reality a whole range of debt solutions are available to fit differing circumstances and needs.

Most people will have heard of a debt management plan however, comparatively few people are aware of the Debt Arrangement Scheme. The Debt Arrangement Scheme (DAS) is a more formal debt management plan which conveys benefits to the debtor that cannot be afforded by a debt management plan.

The Debt Arrangement Scheme prevents unsecured creditors from taking legal action provided that the debtor maintains their side of the agreement.  A Debt Arrangement Scheme client can therefore carry on meeting their obligations free from this legal worry, just like a trust deed.

A debt management plan also cannot guarantee that interest charges will be suspended or reduced. The Debt Arrangement Scheme, like a trust deed, ensures that interest on the relevant unsecured debts ceases once it is up and running.

A Debt Arrangement Scheme or a trust deed relies upon the debtor being able to commit to making regular contributions towards their debts. Due to inflation, wage stagnation and increased levels of joblessness this isn’t possible for everyone. This can cause sequestration (bankruptcy).

For some time a significant group of people in Scotland who could not afford their debts had no access to sequestration. This was because unless legal action had taken place, a creditor initiated legal action, a trust deed failed or the debtor met certain criteria, there simply was no route to bankruptcy.

Nowadays an approved person can issue a Certificate for Sequestration after they have confirmed with a debtor that they have neither the surplus income nor the assets to be able to repay their debts.

Where a debtor considers that they may have some disposable income they may be able to approach an Insolvency Practitioner (the professionals that take trust deed appointments) for the issue of the Certificate for Sequestration with a view to that IP then taking the bankruptcy appointment. The IP fees for the bankruptcy services would then be drawn from the contributions made.

If the debtor is sure that they will not have any surplus income for bankruptcy contributions they may approach a Money Adviser at their local CAB or Local Authority for the issue of the Certificate for Sequestration and then apply to the Accountant in Bankruptcy for the sequestration itself.

Of course, this extended range of options is confusing for people who are already worried enough about how they’ll pay for their essentials and bills in the coming weeks and months. A professionally qualified debt adviser will be able to work through your circumstances with you. They may suggest a trust deed, a Debt Arrangement Scheme or a debt management plan.

The Trust Deed Forum (http://www.trust-deed.co.uk/) is a debt help resource for residents of Scotland. As well as including an excellent trust deed forum, there are plentiful resources dedicated to the various debt solutions available in Scotland including a trust deed, the Debt Arrangement Scheme or bankruptcy via the Certificate for Sequestration. The website employs the services of four professionally qualified debt advisers that are available to enquirers.