Other debt solutions

Possible debt solutions available to you

Whether your debt has become overwhelming or you’re looking for a more manageable way forward, here’s a quick guide to some of the options you can explore. We’ll help you find the right path, at your own pace.

Scottish-only debt solutions

Repayment Arrangement

This is an informal, self-managed agreement to pay your creditors what you can afford – usually for a short period of time.

  • You contact creditors directly and agree reduced payments.
  • You can ask them to freeze interest or charges, but they don’t have to.
  • Your credit score will be affected as payments will be lower than contractual amounts.
  • As it’s not a formal arrangement, your creditors can take legal action against you if they wish.

Click here to know more about a Repayment Arrangement.

Debt Management Plan (DMP)

A DMP is an informal arrangement set up for you by a debt management company like PayPlan – but it’s not legally binding.

  • We don’t charge for a DMP.
  • We’ll negotiate affordable monthly payments.
  • It doesn’t include priority debts like mortgage or council tax arrears – you must keep paying those.
  • Creditors can still change terms or add interest if they choose and take legal action against you.

Click here to know more about a DMP.

Individual Voluntary Arrangement (IVA) 

A legally-binding solution administered by an Insolvency Practitioner (IP), usually over five years, or six, if you have a certain amount of equity in your home.

  • You make a realistic monthly payment based on your income.
  • Creditors vote to accept – if successful, interest stops and legal action pauses.
  • If creditors approve your IVA, you’ll be listed on the Insolvency register which can be accessed by anyone, including potential lenders and employers.
  • As you need 75% by value of your creditors who vote to agree to your IVA, it’s not a guarantee.
  • If you miss payments, or break the agreement of your IVA, your IVA can fail, which can lead to the petition of bankruptcy.
  • You stick to the plan, finish it and your included unsecured debts are written off.
  • Your credit file shows the IVA for six years from approval.

Click here to know more about an IVA.

Debt Relief Order (DRO) 

A DRO is designed for those with lower debts and few assets. You can apply for one through an ‘approved intermediary’.

  • To be eligible for a DRO, you must have under £50,000 in unsecured debts, assets £2,000 or below (£4,000 vehicle limit) and disposable income of £75 or under.
  • There is currently no fee to apply for a DRO.
  • Once a DRO is approved, it’ll appear on your credit file for six years and you’ll be listed on the Individual Insolvency Register. The debts included will be written off after 12 months.
  • Whilst a DRO is in place, you can’t act as a company director, and it may have an impact on your ability to work in certain professions
  • If your situation improves while in a DRO, you’re DRO may fail and you’ll need to look at an alternative solution.

Click here to know more about a DRO.

Bankruptcy

This is a form of insolvency lasting one year, but payments can be required from your income for up to three years if you have surplus.

  • You apply for bankruptcy online and pay a £680 fee (£683 for those who live in Northern Ireland), which can be in instalments, but it’ll only start once the fee has been paid in full.
  • An Official Receiver/Trustee is placed in charge, and they’ll be able to advise whether assets such as a house or car need to be sold.
  • You’ll be required to continue paying your priority and secured debts.  
  • Bankruptcy appears on your credit reference file for six years from the date it was made. It’s published in the London Gazette and will appear on the Individual Insolvency Register for the duration of the bankruptcy
  • Lenders will be made aware of the bankruptcy which may make borrowing more difficult in the future.

Click here to know more about Bankruptcy.

Debt Settlement

This may be suitable if you have a lump sum to offer to pay back your debts, such as from an inheritance or a windfall.

  • A full settlement means you pay the full debt including interest – once accepted, it’s marked as ‘satisfied’ on your credit file.
  • A partial settlement involves paying back less than you owe – it’ll appear on your credit file and could affect your ability to borrow in the future.
  • Your creditors don’t have to accept the settlement offer, if they don’t you’ll still be 100% liable for the full debt balance.
  • Unless you settle all your unsecured debts, you’ll need to consider an alternative solution for the remaining debts which you’re still liable for.

Click here to know more about Debt Settlement.

Debt solutions only available in Scotland

If you live in Scotland, there are dedicated solutions designed to reflect different legal and financial systems. These can help you manage or write off debt based on your situation.

Minimal Asset Process (MAP)

This could be a suitable option for those with low income and minimal assets. Debts are usually written off after six months.

  • You must owe between £1,500 and £25,000 in unsecured debt.
  • Your assets must be worth less than £2,000 in total and no single item can exceed £1,000 (car limit: £3,000)
  • No application fee and no payments are required if you meet the criteria.
  • Once approved, creditors can’t contact you or add interest.
  • If your situation improved during your MAP, it’ll fail and you’ll need to consider an alternative solution.
  • MAP stays on your credit file for six years and may affect your ability to rent or work in certain roles.

Click here to know more about MAPs.

Sequestration

This is Scotland’s version of bankruptcy. You’re released from your debts after one year, but may need to make payments for longer.

  • You must owe over £3,000 in unsecured debt and co-operate fully with your appointed Trustee.
  • There’s a one-off fee of £150 to apply.
  • You may be asked to contribute for up to four years if you have surplus income.
  • Assets (like your home or car) can be sold to repay creditors, and it could affect your ability to work in certain professions.
  • You may not be able to borrow any more than £2,000 before you’re discharged.
  • Sequestration will appear on your credit file for six years.

Click here to know more about Sequestration.

Trust Deed

This is a formal, legally-binding agreement to repay some of your debt over a fixed period – usually four to five years.

  • You need to owe at least £5,000 and have at least £50 surplus income each month.
  • Once agreed, creditors can’t chase you or add more charges.
  • At the end of the Trust Deed, any remaining debt included in the plan is written off.
  • Like an IVA, your spending will be reviewed, and some restrictions may apply.
  • If you don’t stick to the terms, you may be made bankrupt (sequestrated).
  • A Trust Deed stays on your credit file for six years from the date it’s signed.

Click here to know more about a Trust Deed.

Debt Arrangement Scheme

This is a flexible way to repay your debts in full, through affordable monthly payments.

  • You must have one or more debts that you’re struggling to repay and a consistent income.
  • Interest and charges on your debts are frozen as long as you keep up with payments.
  • Your home and other assets are protected, unlike in sequestration.
  • There’s no time limit – the DAS lasts as long as it takes to repay what you owe.
  • It’ll show on your credit file while active and default notices may remain for six years.

Click here to know more about a DAS.