Scotland remains very much a part of the United Kingdom, despite the prospect of becoming an independent country having been raised in earnest during the national referendum on the subject back in 2014.
But even as part of the UK, Scotland is able to function as its own country in many respects and can often establish quite different ways of doing things from its nearby neighbours England and Wales.
One context in which Scotland is currently ploughing its own furrow is when it comes to the various mechanisms via which individuals can aim to haul themselves out of debt and towards a brighter financial future.
Debt Arrangement Schemes
One of the keys to success in the way Scotland has approached the provision of debt solutions in recent years has been the use of Debt Arrangement Schemes or DAS. These schemes are not available elsewhere in the UK but have been highly effective in helping hundreds of Scots escape their debts without entering insolvency.
DAS were first created in 2004 and they’ve now helped many thousands of Scots become debt free and they are being recommended for use elsewhere in the UK and the world. They are essentially mechanisms through which debtors are afforded certain legal protections from their creditors, who are in turn able to establish what their debtors can and cannot afford to repay.
Light at the end of the tunnel
The basis of a DAS is a Debt Payment Plan, which effectively commits a debtor to repaying their creditors over a specified period of time. The plan lays the foundations for an individual’s debts to be repaid in full but at a pace that makes this possible and doesn’t involve the kind of creditor pressures that a debtor might otherwise have no choice but to become accustomed to.
The idea is that by establishing a plan and a binding deal between a debtor and his or her creditors, key issues can be settled and the individual involved can see light at the end of tunnel in terms of dealing with their debts.
Crucially, while these deals involve certain legal protections, they are not considered to be a form of insolvency or bankruptcy in Scotland. So users of a DAS can avoid the position of becoming insolvent, which can have much longer lasting and potentially much more damaging consequences.
The importance of having a plan
Of course, not every Debt Payment Plan is successful as a means of turning around an individual’s financial position and there are still occasions when a DAS doesn’t work and the person cannot subsequently avoid sequestration (the Scottish term for bankruptcy). But having a plan and using a DAS has proven to be a system that works in many cases and more and more Scots take this route to becoming debt free with every year that passes.
So there’s good reason to expect to see the use of Debt Arrangement Schemes spreading beyond Scotland to the rest of the UK in the coming years, for the simple reason that they help people who are struggling with debt get back on track and creditors recoup whatever money they’ve owed in full.
But, if nothing else, the success of our DAS systems illustrates just how crucial it can be for anyone struggling with debt to communicate with their creditors and establish a viable repayment plan on the basis of expert advice as early as they possibly can.
John Baird is a personal finance and insolvency expert from Scotland Debt Solutions. He specialises in advising people on how to manage their money and deal with their personal debt problems.