Christine Sinclair

Convenor, Money Advice Scotland

Scottish Statutory Debt Solutions •  Debt Arrangement Scheme

•  Protected Trust Deed

•  Sequestration

Debt Arrangement Scheme •  Advantages for Debtor

•  Protection from diligence and sequestration •  Interest & charges frozen •  One payment •  Variation if change in circumstances

•  Advantage for Creditor •  Repayment of debt

Debt Arrangement Scheme •  Disadvantages for Debtor

•  Time to repay the debt and affordability •  Unable to obtain credit except from certain

prescribed purposes •  Disadvantages for Creditor

•  Time taken to repay the debt •  Unable to add interest & charges to the debt •  Cost of administering the scheme met by

creditors

Protected Trust Deed •  Advantages for Debtor

•  Does not have to demonstrate Apparent Insolvency.

•  Not barred from certain types of employment. •  Wages arrestment ceases. •  Normally discharged after 4 years.

•  Advantages for Creditor •  Assets realised for the benefit of creditors.

Protected Trust Deed •  Disadvantages for Debtor

•  May have to sell home.

•  Disadvantages for Creditor •  Dividend paid may be very low.

Bankruptcy •  Advantages for Debtor

•  Normally discharged after 1 year (or 6 months for Minimal Asset Process).

•  Existing diligence ceases to have effect.

•  Advantages for Creditor •  Assets realised for the benefit of creditors.

Bankruptcy •  Disadvantages for Debtor

•  May have to sell home. •  Cannot hold certain jobs or public positions. •  Access to credit is limited to £500.

•  Disadvantages for Creditor •  Dividend paid, if any, may be very low.

Ian Fiddeman

Policy Director, British Bankers Association

What makes a Good Debt Solution?

Good  Outcomes  

CREDITORS   CUSTOMERS    

Binding   Fair  

Efficient   Consistent  

Options In England & Wales

• Informal  Arrangement  • Formal  Forbearance  • Debt  Consolida?on  • DMP  

• Administra?on  Order  • Debt  Relief  Order  • IVA  • Bankruptcy  

Regulatory  Framework   Legisla?ve  Framework  

Prescrip?ve  solu?on    

Flexibility    

Questions? •  What do you see as the benefits / drawbacks of the

Scottish debt solutions? •  Is a legislative approach too prescriptive/ inflexible

to treat customers individual circumstances? •  Do we have sufficient capacity in the debt advice

sector to implement change? •  What are the barriers to change, and where should

remedies go further? •  How do we get the buy-in of the non-financial

sector?

Questions?

High  Road  or  Low  Road?  

Andrew  Smith    

If  it  ain’t  broke  don’t  fix  it?

•  We  aren’t  doing  a  good  job  •  Because  we  aren’t  reaching  enough  of  the  people  who  

need  help  •  Because  there  aren't  enough  of  us  •  Because  we  squabble  •  Because  people  in  debt  hide  away  

 

What’s  good  about  DAS?

•  Good  for  debtors  •  Good  for  creditors  •  Feels  morally  right  

 

A  DAS  for  England  and  Wales

•  StandsGll  •  Freeze  interest  and  charges  •  Repay  all  they  can  •  Paid  for  by  creditors  

Evolving  the  DAS  

•  StandsGll  for  all  reasons  •  Link  to  financial  capability  strategy  •  Seamless  link  to  insolvency  procedures  if  necessary  •  Single  process,  restoraGve  in  aim  

Delivering  new  DAS

•  Supply  •  RegulaGon  •  Funding  •  Simplicity