Debt management Scotland

The economic downturn has affected most of us in one way or another, and has left increasing numbers of people struggling with debt. Fast-rising costs of living combined with shrinking incomes have left many people wondering how they will cope.

If you`ve been looking for the right debt solution, you may have heard of Trust Deeds (a Scottish alternative to bankruptcy) and IVAs (Individual Voluntary Arrangements - the equivalent for residents of England, Wales and Northern Ireland).

Another way of dealing with debt is a debt management plan. Unlike Trust Deeds/IVAs, debt management plans do not vary from country to country - a debt management plan in Scotland works in the same way as it would anywhere else in the UK.

How can debt management help me?

On a debt management plan, you`ll negotiate with your lenders, asking them to accept that you`ll repay your debts in smaller monthly amounts (based on what you can afford once your other essential commitments have been covered) over a longer period of time.

As well as making your debts manageable in this way, it`s also possible to negotiate for a reduction or freeze in interest and other charges. This can prevent your debt from getting any bigger.

It is possible to arrange a debt management plan on your own, but this often involves a lot of negotiation, which can be time-consuming. This is one reason you may prefer to let a professional debt management company negotiate with your lenders and arrange the plan on your behalf.

Is debt management right for me?

This will depend on your circumstances. In general, a debt management plan may be right for people who cannot afford their existing debt repayments, but would be able to repay their debt in full in smaller amounts.

However, if you don`t think you`ll be able to commit to regular payments, or if you can`t realistically see yourself ever paying off your debts in full, then another debt solution may be more appropriate.

Before deciding on any debt solution, make sure you speak to a professional debt adviser, who may be able to recommend a debt solution that`s right for you.

A note about debt management

As with any debt solution, a debt management plan does come with its drawbacks.

Whether or not you enter a debt management plan, `defaulting` on (failing to keep up with) your payments as originally agreed will show up on your credit report, potentially making further credit more expensive and/or harder to obtain for the six years it remains on your report.

Plus, creditors aren`t obliged to agree to any changes to your original repayment plans. If they don`t agree to freeze interest, repaying your debts more slowly will mean you end up paying more in interest, as your debts will be accruing interest for longer.

For debt advice, and more on the various debt solutions that might be able to help you, call 0800 195 2911 or click here.