A financial debt is incurred when an individual or company owes one or more creditors money. In essence, most debts are manageable and the party that owes can pay back the money within the time agreed. However, there are several instances whereby the money owed can escalate to proportions that are outside the debtor’s ability to pay back. This can occur, for instance, when there is a rise in interest rates. At this point, debts can become a burden to the debtor and in such situations; they can lead to court cases and bankruptcy.
Background of the Debt Arrangement Scheme
In Scotland, there is a tool controlled by the government called the Debt Arrangement Scheme, or DAS. For many companies or people in debt, this can serve as an alternative. The government scheme Scotland works by allowing the repayment of a debt by the debtor over extended time duration. As long as the agreed (reduced) payments are maintained over this extended period of time, there is no legal action that the creditor can take against the debtor.
These reduced payments can be made over whatever reasonable period of time that has been agreed between the debtor and creditor. In fact, once the DAS comes into effect, interest rates on the debt are frozen so that they do not affect future payments of the debt. Business debts incurred by sole traders can also be included in DAS.
Why You Need a Money Adviser
Although it may seem like a straightforward process, having a qualified money adviser could come in handy when you are applying for DAS. The first thing he or she will do is to help you assess how suitable you are for DAS. Once you have been approved for the debt arrangement scheme, the adviser is also going to help to place you on the scheme. Another thing that the adviser does is provide the debtor with debt management advice. In total, there are five parties that are involved in the debt arrangement scheme.
These parties are — the debtor, the creditor, the adviser, payments distributor and DAS administrator. In this case, the creditors are the individuals or parties to whom the money is owed. They agree and accept payments through DAS. The payment distributors and money advisers are all approved by the DAS administrator. The work of the payment distributors is to distribute the money that has been paid by the debtor to the creditor. The money is further divided proportionately once the amount of the debt has been split according to its size.
Fundamental Issues To Consider Once You join DAS
Once the debtor enters into DAS, his or her main role is to maintain the proportions of the debt which have been agreed. More importantly, the debtor is protected from bankruptcy, court enforcement and loss of the debtor’s home as long as the agreed mortgage payments and other obligations in the agreement are maintained. An aftercare service as well as advice on how one can manage the debt is also provided in the government law once somebody enters into a debt agreement scheme. The biggest advantage that DAS has is that it offers a person breathing space when it comes to the payment of a debt as well as extra time for a person to pay the outstanding debt. The good news is that there are many good money advisers who you can contact when you are interested in entering into a debt agreement scheme.
This government scheme Scotland was welcomed by the whole nation once it was approved in 2004. It has helped many people stay out of debt while, at the same time, assuring the creditors that their money is going to be paid. There are two very important things that a person needs to keep in mind once he/ she enters into a debt agreement scheme.
The first one is that the lowered periodical payments that have been agreed should be maintained. Once you skip as much as a single payment, then there could be severe consequences. Therefore, pay the money agreed in each of the intervals that have been agreed. The second thing that you need to pay close attention to is the advice that shall be given to you by the debt adviser. This is a person who will help you avoid making the same mistakes that you made before.