What options do you have to clear your debt?

E: If you’re in debt, there are several options to help you back into the black.

If you’re struggling to keep up with everyday bills or are fighting against a tide of debt repayments, there are a number of options that you can explore. It just takes a little research to find out what will work best for you.

Before making a decision about what will fit your circumstances you need to get independent advice from an expert. You may also be able to reach an informal arrangement with your creditors, using advice from a debt charity or similar organisation.

Also keep in mind that most of the options to clear your debt will have an impact on your credit score, which can make it harder for you get things like loans and credit cards in the future – so it’s important to do your research and seek advice.

Here is an outline of the most common options for getting on top of debt.

Debt arrangement scheme (DAS)

This is a free debt management solution that allows an individual to repay their debts over time in affordable segments through a debt payment programme (DPP). During the course of the DAS, a person is protected against creditors trying to recover money owed, which can ease the strain caused by financial worries.

To be eligible for a DAS, you must live in Scotland, have one or more debts, use an approved money advisor and have a reasonable amount of money left over each month after everyday essentials have been taken care of.

To get started, your money advisor will register your intention of applying for a DPP, giving you a window of six weeks where creditors can’t pursue you. If they don’t reply within 21 days of receiving the DPP proposal, it will be assumed they have accepted it. If any firms dispute it, then the DDP administrator will decide whether or not this is reasonable.

Debt management plan

This is an agreement between you and your creditors which sees you pay back what you are able to afford on non-priority debts that aren’t secured against your home. You must have a reasonable sum of money left over once you have paid for things like bills and food.

The arrangement sets out exactly how much you will repay each month and over what period of time the money will be given back. The plan is typically managed by a third party who will pay the creditors on your behalf, meaning you don’t have to directly deal with them.

Many charities and organisation will create a debt management plan for free, so watch out for firms that will charge a fee for the service.

Trust deeds

The third option that you may want to consider is a trust deed, which is a voluntary agreement between you and your creditors to pay back a proportion of what you owe. This allows you to make monthly repayments against unsecured debts over the course of four years. After this time, the rest of what you owe is completely written off.

One of the biggest benefits of a trust deed is that your creditors are legally prevented from adding more interest to the money that is owed and cannot take any further court action against you.


Typically seen as the last resort, sequestration is the name for bankruptcy in Scotland. Any assets that you have are signed over to a trustee to help pay off what you owe. After a set period of time – usually a year – most of the outstanding debt is written off to allow you to wipe the slate clean and start again.

You can apply for this if your debts are in excess of £1,500, you live in Scotland and have not been sequestrated in the last five years.

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