Jane Edwards | Business | April 11, 2012
This financial tool was created by the Scottish Government in two thousand and two to help those with overwhelming debts. It is a program called the debt arrangement scheme. For those who owe money to multiple creditors, this program provides financial education, while giving them the opportunity to avoid bankruptcy. It is available to all who live in Scotland.
When one is in debt and in danger of losing their home, they may apply for this program. While it is not a debt relief program, (not bankruptcy), this program does give a debtor more time to pay their obligations.
As soon as an application is begun, most court action taken to enforce collection of debts is put on hold. Only property already listed for auction or already seized is ineligible and will not be returned.
Beginning with the application process and during the life of the agreement, a money adviser consults with the debtor. Principles of money management are taught.
A plan for repayment is created by a money adviser in order to satisfy the debt. Income is considered, along with fixed expenses, such as food, mortgage or rent, and car payment. Surplus money is then used to make this repayment plan. After the plan is implemented, a payment is sent to the payments distributor. The money is divided between the creditors.
As long as payments are met in a timely manner, no further action can be taken against the debtor. But if payments become delinquent, then the arrangement terminates and enforcement measures can proceed.
Most of the time a creditor will readily agree to such an agreement. It may take more time for them to collect money, but they will get it eventually. Under bankruptcy of course there is no collection of funds. These creditors incur financial losses when their customers go into bankruptcy. During bankruptcy, anything that the debtor owns that is of value is sold off. The money collected this way is then distributed among creditors, but is hardly ever enough to satisfy the debts.
Having legal force behind it, this measure blocks the collection of extra money after the termination of debt. Another provision is that all terms of repayment must be fair and reasonable as determined by the money adviser. So, if a creditor does not like the terms that a money adviser puts forth, the creditor must still abide by those terms.
Once a debtor has repaid the remaining balance of the outstanding sum owed, no additional interest, fees, or penalties may be assessed or collected. The debtor is freed from all such prior obligations, gaining a fresh start. With the education received during the process the former debtor should have sufficient knowledge to stay out of debt.
The government decided in favor of a system more favorable to debtors when it created the debt arrangement scheme. This new system restricts the rights of creditors. It was designed to prevent creditors from forcing debtors into bankruptcy. It protects homes and helps rebuild lives. In short, it has freed many from the overwhelming crush of debt that has ruined so many lives in the past.
You should definitely take a peak at this debt arrangement scheme. We will show you a money adviser Scotland that’s going to help you today.
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