People tend to take up loans to meet various requirements, which over a period of time translates to a debt. At times, the repayment of the debt could be taxing in spite of the best efforts to repay back the loan. Governments and financial institutions provide various debt solutions which can be used by defaulters who are willing to pay back the loans.
Debt situation in Scotland
Scotland has multiple debt solution options which have eased the repayment of the loans. The last few years have seen the debt situation in Scotland becoming worse. One of the major reasons is the rise in income that is not matching the inflation rates. Over the last five years, the average income of individuals in Scotland has increased by 5 % which is much less than the rate of inflation. This means that the real income of people has come down, which they are compensating by taking up loans.
There are further indicators which reflect the increased trend towards taking up loans and not being able to repay them on time. Nearly 41 % of the council tax returns are in arrears, and even the electricity bills have an arrear rate of 37 %. Age group of 25-49 years are generally considered to be earning group in the demographic. Their financial state reflects the prevailing situation. Over the last 5 years, the percentage of people seeking debt in that age group has increased by 6 % and now stands at 36 % of the age demographic being in debt.
The debt solutions
Debt help expert’s advice on taking up different debt solutions that government and other organizations offer to aid defaulters in paying back the loans. One of the trends that these experts cite is that individuals having debts taking up further loans to clear the existing debts and get deeper into debts. To avoid such a situation, one of the better solutions are the debt solutions which help to systematically repay back the existing loans without much burden. This also helps to free up the real debts that can be used to cover up other essential expenses.
Let us look at few of the major debt solutions that are available in Scotland.
- Debt Payment Program
Debt Payment programs help to repay the debts through easy and affordable monthly payments. Scotland Debt Arrangement Scheme is a Debt Payment program that is available in Scotland. With the assistance of an approved organization, individuals can opt for the scheme.
There are multiple benefits of opting for such Debt payments programs (DPP):
- This scheme helps to repay the debts at an affordable rate which leaves enough part of the income to be spent on meeting essential payments.
- Any of the charges or the interest on your loan would be frozen.
- Scotland Debt Arrangement Scheme protects the debtors from creditors in taking any legal action.
- There is also option of varying the payment depending on any changes in your situation.
- They debts are totally written off once the Debt Payment program is completed.
Because of these various benefits, many of the Debt Help experts advise Scotland Debt Arrangement Scheme to be one of the best Debt Payment Programs which is available in Scotland.
The experts also advise the individuals seeking DPP to be aware of few of the risks that they would have by opting for this program:
- Your details are put up in a register when you opt for DPP, which can be accessible by anyone.
- Upto nearly 10 % of the monthly payment is used up to cover the running fees.
- Creditors can take up further legal action in case you fail to make the payments after opting for DPP.
2. Trust Deeds
Another option available for loan payers in Scotland is Trust Deeds. This along with DPPs is one of the better options to pay back the loan. Trust Deed in Scotland is a protected Trust deed which is a legal arrangement that allows loan payers to make reduced payments over a period of 4 years. Any amount which is remaining after the period is generally written off.
In the case of a trust deed, the unsecured debts need to be more than the assets you have. In other words, it is an instance of declaring insolvency. Personal Loans, Credit Card debts, store cards etc. are considered as unsecured loans for which you can opt for taking up Trust Deed in Scotland.
Few of the benefits of Trust Deed include:
- You can schedule the payment of your debt over a period of 4 years. The remaining debt would be written off after this period.
- Like in the case of DPP, by taking up Trust Deed in Scotland you would be shielded from the creditors and any actions taken by them.
- You are exempted from appearing in the court even though it is a formal debt solution that in general needs court intervention.