Help­ing to man­age your debt and avoid bank­ruptcy

Rutherglen Reformer - - Debt Help & Advice -

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.”

A debtor needs to seek in­de­pen­dent ad­vice. No-one should seek pro­fes­sional ad­vice on the back of a Face­book ad­vert

Money wor­ries DAS al­lows you to pay off debt in a man­age­able length of time

Debt ad­vice Bank­ruptcy John Cook, Ac­coun­tant in

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