adminIt’s difficult to know what to do when in debt, especially what company to go to for free advice. Glasgow is the debt capital of Scotland and many people don’t know where to turn for debt help and advice.
There are fee charging debt companies, companies which advise you for free but charge for the solution and debt advice charities. You should always make sure a debt advice company makes you feel comfortable and understands your problem. If you feel a debt advice company does not offer the level of empathy and care you expect 債務舒緩 then the fact the advice is free would not be reason to go with that company. You have a choice on the debt company you choose to help you with your problem and there are lots of good companies out there.
How can debt advice be free?
People in Glasgow are often worried about their debt problem and are confused by which company to trust. The problem is that there is a lack of transparency in the debt advice industry which leads to confusion and frustration. There are two types of for profit company: the one’s which charge and fee and the one’s that don’t. The companies that charge can give you a bill for up to £3,000 and then leave you with your debt problem – so if you take anything from this article, it’s this, never, ever pay for debt advice.
Other companies that don’t charge for the advice will what to give you one of their debt solutions. You will generally have a choice over which debt solution you will follow. It’s important you are aware of the obligations you face when entering a debt solution. A free debt advice company will offer the debt solutions in-house to ensure they can, in some instances, make money from the debt solution itself. Most debt solutions are not paid for directly by the person in debt, instead creditors will hire the debt solution company to carry out the work.
What debt solutions are available
A Debt Management Plan is an affordable repayment programme set up by a debt management company. You would make one monthly contribution to a debt management company and they would liaise and pay your creditors. A debt management plan is usually for debts which will be repaid in a shorter period, such as less than 5 years. It’s an informal arrangement so can be difficult to stick to when times get tough, such as at Christmas and birthdays.
A Protected Trust Deed is a legally binding agreement with your creditors where you agree to make a monthly contribution to your debt via an insolvency practitioner. One of the main benefits of a Protected Trust Deed is you can repay a minimum of 10% and the rest of the debt is written off at the end of the solution. Typically the return is 30% of the money borrowed. A Protected Trust Deed usually lasts for 3 years. So, if you owed £100,000 to your debt, you would typically repay £30,000 over a 3 year period, with the rest being written off at the end. In order for this to happen you should comply with your Trustees requests. In Scotland there are roughly 9,000 Trust Deeds protected each year.
The last debt solution is Sequestration, also known as Bankruptcy in England, Wales and Northern Ireland. Sequestration is the most damaging debt solution for your credit rating however if you are unemployed or have no income then it may be the right choice.
Top tips for choosing a debt advice company
1. Expect customer service to be high – the debt advice company should be on your side and fighting your corner. If you feel it is not, then walk away.
2. Check the company has a consumer credit licence with the Office of Fair Trading. This is an essential element of debt advice and ensures the company has been closely scrutinised.
3. Make sure you feel like the company is being truthful with you – if not, leave.
4. Always ask how long you will be in your debt solution, anything over 8 years is unlikely to be correct for you.
5. Never, ever, pay for debt advice. It’s so important I’ll say it again, never, ever.
Debt advice in Glasgow
In comparison to other areas of Scotland, Glasgow faces a larger percentage of people in poverty and needing debt help. Sometimes, there is only one solution available to residents from Glasgow in need of debt help, this is Sequestration. This can be attributed to a lack of employment, loss of benefits or their debt problem was left too long and the debt (including interest and charges) has become too severe for any other realistic debt solution.
Glaswegian’s looking for debt help can speak to a number of people, including family, business professional or specialist debt companies. There are many options available to them.
It’s estimated that of the 9,000 Trust Deeds each year in Scotland that almost 2/3rd come from Glasgow. The Protected Trust Deed route is appealing because it’s a viable alternative for people living in Glasgow to Sequestration.
Debt solutions in depth for Glaswegians
We explore the three main debt solutions for people living in Glasgow, Debt Management Plan, Protected Trust Deed and Sequestration.
Debt Management Plan
The Debt Management Plan is a well known debt solution across Scotland and the UK. You will repay all of your debt but do so over a longer period of time than originally agreed. You may also be able to freeze interest and charges.
The benefits of a Debt Management Plan are;
You have to tell your Debt Management company about your situation and they will do the work for you
You don’t have to deal with your creditors anymore
You make one monthly payment to your Debt Management company and they deal with your creditors for You may get your interest and charges frozen
The negatives of a Debt Management Plan are;
A Debt Management company would charge you for their service, which you would have to pay directly
You have to repay all of the money you borrowed, which can mean the solution lasting until all money is repaid
It can be negative on your credit rating
Your creditors can change their mind at any stage, even if they agree at the start of the Debt Management Plan
Protected Trust Deed
The Protected Trust Deed is a popular debt solution because of its ability to reduce the amount of money repaid to creditors. By making a proposal to your creditors you are saying you can not repay the money you borrowed but would be willing to pay back a percentage over a period of time. This percentage can be as little as 10% over a 3 year period. Typically a house is secure in a Trust Deed and the insolvency practitioner will only look for the available equity for the benefit of the creditors.
The benefits of a Protected Trust Deed are;
The Insolvency company will liaise with your creditors on your behalf
A Trust Deed is more flexible than Sequestration and less damaging for your credit rating
It’s legally binding, so once your creditors accept your proposal they cannot change their mind
Interest and charges will be frozen
You can be debt free in 3 years
The negatives of a Protected Trust Deed are;
If you fail to maintain monthly payments to your Trust Deed you are likely to face Sequestration
Your credit rating will be affected
Your Trust Deed is advertised in a publication called the Edinburgh Gazette
You may have to check your employment contract to ensure you can enter a Trust Deed
Sequestration / Scottish Bankruptcy
Sequestration, or Scottish Bankruptcy, can come if 3 different forms, normal sequestration, LILA route, or certificate of Sequestration. Scottish Bankruptcy is generally a last case scenario, however most people think it’s there only option out of debt. With the right expert debt advice, other solutions can be identified.
The three routes to Sequestration are dependent on your assets and how much you earn. If you don’t have a house and earn minimum wage then LILA or certificate of sequestration could be the right route for you. Scottish debt specialists who are qualified debt experts would be able to provide tailored debt advice and inform you of what route would be best.
The benefits of a Scottish Bankruptcy are;
Once the solution is in place then no further action can be taken against you
You will make one payment to your Trustee each monthly
You will no longer have to deal with your creditors
You can be debt free in 3 years
The negatives of a Scottish Bankruptcy are;
If you have any valuable items, such as a car then they may be sold. If you have equity in your house then you will probably have to sell your house too
You will have to pay any disposable income to your sequestration
You cannot take out further credit above £250 whilst in Sequestration
You cannot act as a company director for the duration of your Sequestration
Debt Support Trust is an industry leading debt advice Charity which seeks to relief the debt problems for Scottish people.
Debt Support Trust has assisted thousands of people out the misery of debt and can help you too.