Personal Debt Help Scotland

There are three main options available in Scotland for individuals and sole traders who are struggling under the weight of unmanageable debt. These are: a Trust Deed, the Debt Arrangement Scheme, and Sequestration.

While each have their own advantages and disadvantages, it is likely that one of these options will offer a way out of your current financial difficulties if you have got to the stage where you are unable to continue serving your debts as you are.

• Trust Deed – Trust Deeds are only available in Scotland and function in a similar way to an Individual Voluntary Arrangement (IVA). Trust deeds typically last for four years, during which time you will make a monthly repayment to your Trustee who will divide this money amongst your creditors. As long as you keep up with your agreed repayments, any debt which remains after the four years will be written off.

• Debt Arrangement Scheme (DAS) – A DAS is a government-backed scheme which gives an individual time and breathing space to pay back their debts. Unlike a trust deed, no debt is written off as part of the process, however, a DAS can be set up to last as long as it takes for the individual to clear their debts. A DAS is not classed as a formal insolvency process which can make it a suitable process for those who need help managing their debts but do not want to declare themselves insolvent.

• Sequestration – Sequestration is the Scottish term for bankruptcy and is the arguably the most serious personal insolvency solution. An individual can enter sequestration voluntarily or they can be forcibly sequestrated by a creditor who has exhausted all attempts to recover the money they are owed. As part of the sequestration process, all assets of the individual will pass to the appointed Trustee who will use these to pay back creditors as far as possible. After discharge from sequestration, all unsecured debts which remain unpaid will be written off. Depending on your income and disposable funds, you may be asked to make a monthly contribution towards your sequestration.

In order to enter into one of these processes, you must first take advice from an approved money adviser who will carefully assess your current position and identify the most appropriate solution for you. Scotland Liquidators have a team of licensed insolvency practitioners and approved money advisers who are here to help you every step of the way when it comes to solving your debt worries.

Members’ Voluntary Liquidation, usually referred to as an MVL, is the most tax-efficient way of shutting down a solvent company. Liquidation of this nature shouldn’t be confused with company strike-off which is another way in which companies can choose to close but this only applies in certain circumstances. If your company has assets or has a complex, intricate structure with a number of directors or subsidiaries, an MVL will certainly be the best course of action for winding up a solvent business.

Our advisers can discuss this with you in more detail as we are doing with numerous directors at present; particularly since the Government announcement the changes to Entrepreneurs’ Rate Relief which has seen an influx in Members’ Voluntary Liquidations.