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Alternatives to MAP

Minimal Asset Process | Guide

MAP isn’t the only debt solution that’s available to Scottish residents. If you’re struggling with unsecured debts, it’s important to speak to an expert about your situation and they’ll be able to advise which solution is the most suitable for you.

The different types of debt solutions available to Scottish residents are:

Sequestration

If you can’t afford to repay your unsecured debts in a reasonable amount of time, sequestration could be suitable for you.

You’ll only make payments towards your debts if you can afford to. If you can, you’ll pay back as much as is reasonably possible and these payments will take into consideration things like your rent or mortgage, food, utility bills and travel costs, which are considered essential living costs. If you do make payments towards your sequestration, these payments can continue for up to four years. On successful completion, usually after a year, your unsecured debts will be written off.

As sequestration is a form of insolvency, there are consequences that you need to consider. For example, your assets, including your property if you’re a homeowner, may be sold to repay your debts. Records of your sequestration will be recorded on the Register of Insolvencies until two years after your Trustee is discharged (when they have completed the administration of your bankruptcy), and it will be recorded on your credit file for six years, meaning your credit rating will be affected for at least that amount of time, and potentially beyond this period.

For our full guide on Sequestration, click here.

Trust Deed

If you’re unable to repay your unsecured debts within a reasonable amount of time, a Trust Deed allows you to pay back as much as you can towards them, usually over a period of four years. Any debt that’s left after that period will be written off.

As long as your lenders don’t object, you’ll make a monthly payment to your Trustee (who looks after your Trust Deed) and they will then distribute that money to your lenders. You’ll be expected to pay back as much as you can, but this will never be more than you can afford and will take into account your essential living costs, for example, your rent or mortgage repayments, food, utility bills and travel costs.

Trust Deeds do have some consequences. For example, if you’re a homeowner, you may have to release some equity from your property to put towards your debts. And, if this isn’t possible, your Trust Deed may be extended by up to 12 months (to the value of the equity you own). Your Trust Deed will be recorded in the Register of Insolvencies, which can be accessed by the general public and will appear on your credit file, so your credit rating will be affected. Also, if your Trust Deed fails, you may face bankruptcy.

For our full guide on Trust Deeds, click here.

Debt Management Plan

If you’re struggling to meet your current monthly payments towards your unsecured debts, but you could afford to make a regular reduced payment, a Debt Management Plan could help.

On a Debt Management Plan you continue making payments towards your unsecured debts, whilst making sure that you have money available for your essential living costs, such as your rent, mortgage, food, utility bills and travel costs.

You, or a Debt Management Plan provider, negotiate with your lenders to try to agree new lower monthly payments that you can afford and that are sustainable. You (or your provider) can also ask your lenders to freeze any interest or charges on the money you’ve borrowed, and although they’re not obliged to agree to accept lower payments or to stop interest and charges, as long as they can see that you are genuinely struggling, and your offer is fair to both you and them, they often will.

There are consequences to a Debt Management Plan. For example, reducing your monthly repayments means you won’t be keeping up with the payments you agreed to and this will be recorded on your credit file for six years. This will affect your credit rating making it harder for you to obtain credit during that time.

For our full guide on Debt Management Plans, click here.

Debt Arrangement Scheme

If you can’t meet your current monthly payments on your unsecured debts, but you could afford to make a lower payment, the Debt Arrangement Scheme (DAS) may be a suitable solution for you.

DAS allows you to continue making payments towards your debts, whilst ensuring that you have enough money to cover your essential living costs. This includes things such as you rent or mortgage repayments, food, utilities and travel costs.

You’ll put forward an application for a DAS Debt Payment Programme (DPP) between you and your lenders, which will outline how much you’ll pay each month. If it’s accepted, you will pay a single, lower payment that will be affordable for you and sustainable too. A DPP will freeze any interest and charges on your accounts, as long as you adhere to the terms of the agreement, although if it fails, your lenders can reapply these charges.

DAS has consequences that you need to take into consideration, for example, you will be reducing your monthly payments, and therefore will not be meeting the original contractual agreements. This will impact your credit rating for up to six years and this will make it harder for you to obtain credit.

For our full guide on DAS, click here.

Debt Consolidation Loan

If you’re finding it hard to keep up with your debt repayments, and/or you are looking for a way to simplify your finances, a debt consolidation loan could help you to pay them back at a reduced rate, over a longer period of time.

You take out new credit to pay off your existing credit, which lets you combine your multiple existing debts into one new manageable monthly payment, rather than having to pay lots of smaller ones. It may also reduce the amount you have to pay each month, though as you’ll be paying back your debts over a longer period of time, you may pay more overall.

These loans can be unsecured or they can be secured against your home. When taking one out, you need to be sure that you’ll be able to afford the repayments each month. This is particularly important if the loan is secured against your property – missing repayments could result in the repossession of your home.

For our full guide on debt consolidation, click here.

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