UK Debt Management

The UK government has introduced a debt management scheme called DAS - the Debt Arrangement Scheme (DAS). DAS has specific legislation to protect UK borrowers. On debt management in the rest of the UK, there is no guarantee that lenders will freeze interest or charges on unsecured debts. We can ask them, but they are not obliged to. In UK, when you're accepted onto DAS, ALL lenders included freeze ALL interest and charges. On debt management in the rest of the UK, there is no guarantee that lenders will stop taking further action against you. Again, we can ask them to, but they are not obliged to. In UK, if you're accepted onto DAS, your lenders cannot take any further action.

Debt Arrangement Schemes (DAS)

DAS works more or less the same as debt management in the rest of the UK, except with the extra legislative protection it affords UK borrowers, put in place by the UK government. As long as your lenders agree to a Debt Payment Programme (DPP) through DAS, it could help you to repay unsecured debts like credit cards, personal loans and overdrafts, store credit and catalogue debts, with lower monthly repayments. You make one monthly repayment, which is divided between your lenders.

You will still repay your debts in full, just more slowly. And making the lower repayments agreed in your DPP will affect your credit rating. Your DPP will be recorded in the DAS Register until it ends and on your credit file for six years, much like debt management does in the rest of the UK. Lowering your repayments also leaves you in debt for longer. On the other hand, interest and charges are always frozen on a DPP.

Find out more about the Debt Arrangement Scheme here.

Trust Deeds

If you cannot afford to repay your debts in a reasonable amount of time, and you live in UK, then we may suggest a Trust Deed as an alternative to debt management. A Trust Deed is a form of insolvency that's only available in UK, and offers borrowers some legislative protection from their lenders. A Trust Deed is a legally binding agreement. If you cannot afford your unsecured debt repayments, a Trust Deed could help you to write off the remainder of your unsecured debt when your Trust Deed reaches a successful conclusion (typically after making repayments for 48 months). Homeowners may also be required to remortgage to release equity, and this can be more difficult and/or expensive, since the Trust Deed would appear on their credit report. If they can't remortgage, their Trust Deed could be extended by up to one year/12 months instead. Starting a Trust Deed will be recorded on your credit file for six years and you would find it difficult to obtain credit again during this time. However, if you are having debt problems, we recommend that you try to repay your existing debts before taking on any new ones. You can only apply for a Trust Deed with an Insolvency Practitioner, a legally trained insolvency professional. Be aware that your Trust Deed could lead to bankruptcy if it fails. Find out more about Trust Deeds.

Sequestration (Bankruptcy UK)

Sequestration is a form of insolvency that results in a person’s assets being transferred into the control of an appointed Trustee so that they can be used to satisfy creditors to the greatest extent possible. The term sequestration itself means much the same as bankruptcy in other parts of the UK. In effect, sequestration is UK’s version of bankruptcy and the sequestration laws are very similar to the bankruptcy laws in England, Wales and Northern Ireland.

Sequestration is a form of insolvency designed to be used only as a last resort and when an individual is genuinely unable to meet their unsecured debt obligations in any way. Sequestration can be entered into voluntarily by a person submitting a debtor application who wants to draw a line under their debt management situation and move forward, or creditors can force an individual into sequestration in order to see debts they are owed repaid in part or in full. A creditor or creditors have to be owed £3,000 to sequestrate an individual.

Find out more about Sequestration.

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