Helping to manage your debt and avoid bankruptcy
Many Scots are being forced into bankruptcy or fear losing their home when a Debt Arrangement Scheme (DAS) could have solved their financial problems.
The Debt Arrangement Scheme (DAS) has helped thousands of Scots get a handle on their debts and pay them back in a manageable manner with 2,239 debt payment programmes set up last year and more than 1500 completed.
With DAS, all interest, fees and charges are frozen, your home is safe as long as you keep up payments on it and you are protected from creditors taking action. It also lets you pay your debts over a reasonable length of time at a rate that suits you .
The insolvency industry is worth an estimated £40 million in Scotland every year but the potential mis-selling of debt solutions means some people are being given wrong advice.
The Internet is awash with companies promising debt solution but many legitimate money advisers fear lucrative trust deeds are being offered where a DAS would be suitable.
“Many businesses popping up on Facebook and twitter are not insolvency businesses but lead generators,” says David Menzies, director of insolvency at ICAS, the Institute of Chartered Accountants of Scotland.
“This is an issue that is constantly on the radar and the fear is that a proportion will not make DAS available as a solution because they are not DAS money advisers.”
DAS is only available in Scotland and can only be set up by DAS-approved money advisers.
Alan Macintosh, from the Govan Law Centre regularly sees clients whose homes are at risk because DAS wasn’t offered.
He says: “If they’d gone through a reputable insolvency practitioner or free sector adviser they would have been given the right advice.
“But unscrupulous operators have done a lot of damage to the industry.
“Insolvency can be the right solution when done properly but it can also be rewarding for companies who are less scrupulous, so it does get abused.
“There is the danger that some companies are motivated just by fees and are not giving people the right advice.
“In the worst case scenario that can mean losing your home.”
Debt remains a problem in Scotland – 18 per cent of Scottish households have credit card debt and Stepchange Debt Charity says the average debt amongst their clients in 2016 was £12,760 in Scotland.
Recent figures show protected trust deeds increased last year in 24 out of 32 Scottish local authorities whereas the rate of DAS was half the previous financial year.
Most debt was caused by a change in circumstances; primarily reduced income, lack of budgeting, separation and divorce, or illness.
The top reasons people give for delaying their debt issue is thinking they can manage it alone, embarrassment and shame, or they don’t think anyone can help.
John Cook deputy chief executive of Accountant in Bankruptcy (AiB) said debt advisers have a moral responsibility to offer clients the right advice.
He said: “A debtor needs to seek independent advice. No-one should seek professional advice on the back of a Facebook advert.” Bankruptcy
DAS allows you to pay off debt in a manageable length of time John Cook, Accountant in
A debtor needs to seek independent advice. No-one should seek professional advice on the back of a Facebook advert