Trust Deeds UK | Deed Of Trust Solicitor | Scotland Protected Trust Deeds Advice Fri, 02 Mar 2012 09:27:45 +0000 en How would Scotland’s share of UK debt affect the population? Fri, 02 Mar 2012 09:27:45 +0000 admin There has been much talk of independence with regards to Scotland and there are many questions which need to be answered before the expected referendum in 2014. One of the main sticking points appears to be what share of UK national debt an independent Scotland would take on and whether in fact this would lead to economic restrictions and limited economic growth.

How much debt would Scotland need to take on?

As of January 2012 the official UK debt stood at £988.7 billion although this figure does exclude banking bailouts. If we look at the Scottish share of the population of the UK as a whole this equates to 5.1 million people against the UK total of 62.2 million which would equate to a share of the debt of the UK in the region of £81 billion. While this figure is substantial in its own right it is not unmanageable and not the end of the world.

How would Scotland finance its debt?

This is one of the main problems with regards to the Scottish share of UK debt because as yet the credit rating agencies have not ruled whether an independent Scotland would attract the current UK triple-A rating or in fact be downgraded. The Scottish government is adamant that Scotland itself would maintain a triple-A rating because of its natural assets in the shape of oil and gas in the North Sea but many experts believe this is not the case.

The difference between a triple-A rating and a double A rating for example may only be a few percentage points but it does make a massive difference to the share of income which is apportioned to debt finance. If the government of Scotland, assuming independence, was unable to finance its debt in the early stages then this debt will increase and place more pressure upon the public sector budget.

Can Scotland survive on oil income?

There is no doubt that despite all of the bluster in relation to renewable energy an independent Scotland would need to depend heavily upon oil income. When you take into account the fact that oil production in the North Sea has decreased over the last three years, the price of oil is very volatile to say the least and oil itself is a diminishing resource, is this a sensible strategy?

There are many who say that Scotland has more than sufficient oil to see it through to the next stage of economic development with the introduction of renewable energy seen by many as the way forward. However, while renewable energy is obviously very important in relation to saving the planet it is not a constant energy source and has significant peaks and troughs in supply. As a consequence this would add a greater risk to any investment in renewable energy and there are indeed concerns as to whether the system would cope with periods of peak demand.

Shared assets

One other major problem and argument in relation to an independent Scotland is the subject of shared assets such as the BBC, post office and other public sector bodies. As these are part of the UK there are many who believe that Scotland, as an independent nation, has no right to any use of these assets unless a specific charge was levied. The Scottish government on the other hand is adamant that these are shared assets of the UK and as a consequence Scotland, whether independent or part of the union, actually “owns” part of these assets.

If it is ruled that these assets are part of the UK and therefore not eligible for transfer to an independent Scotland this will increase the required public sector investment in the short term and would have a significant impact upon an independent Scottish budget. However, if it is ruled that Scotland does “own” half of these assets this would cause major friction with the remaining UK population and future investment in these assets would be a very tricky subject to say the least.

The impact of debt on the Scottish population

While we mention the £81 billion likely transfer to Scotland as a share of the UK debt this figure could be significantly higher with the UK as a whole running a budget deficit for at least the next five years. So if it takes five years for Scotland to become independent then this £81 billion debt could increase anywhere up to £100 billion or more.

This debt is actually a debt on the Scottish population because the funding of this debt would come via taxes and via cuts in the public sector budget. So while not directly a debt on Scottish people it is indirectly a very heavy burden of debt which needs to be financed one way or another. This also brings us onto the subject of immigration as the Scottish government seems determined to increase the Scottish population by attracting overseas visitors to the country. In theory, this should in the long-term increase the tax take for the authorities but in the short to medium term there will be a heavy burden on public services.

The risk of sovereign default

While there has been much discussion regarding what would happen if Scotland was to default on its debt as an independent nation in reality this is unlikely to happen. However, the Scottish government, while very much in favour of independence, believes that by adopting sterling (the UK currency) this would place an emphasis on the Bank of England to be the lender of last resort. In simple terms this would mean that if Scotland was to default on any of its debt then the Bank of England, as part of the UK union, would be liable to pay this outstanding debt.

This is a situation which is likely to cause great concern because why would you take on a currency over which you have no control, over which interest rates would rise and fall in favour of the majority of the UK union and what is good for the rest of the UK may not be good for Scotland. Then, as we mentioned above, we have the argument regarding the lender of last resort and any sensible reason why the UK government and the Bank of England would be willing to take on Scotland’s debt for no apparent reason?

Citizens Advice Bureau Scotland inundated Thu, 01 Mar 2012 16:06:08 +0000 admin The Citizens Advice Bureau in Scotland was inundated with calls last year with a staggering 560,303 issues registered during 2011. This was a 15,000 increase on 2010 and perfectly reflects the growing consumer debt in Scotland and financial concerns. As the economic climate continues to darken it seems as though this enormous figure, which equates to 1 new case every minute, is set to increase during 2012 and beyond.

What can the Citizens Advice Bureau (CAB) do for you?

Many people are totally unaware of the CAB Scotland and the fact it is a bureau which was set by the government, is financed by the state and there to give you advice about a whole range of legal and financial issues. The most common issues at the moment are debt, unemployment and poverty as more and more people feel the pressure of the recession on their income and their outgoings.

Should Citizens Advice be my first port of call?

There are a whole range of issues which are covered by the Citizens Advice Bureau and if you have any legal or financial problems then they are probably a good place to start. While they may not be able to cover every aspect of your concerns and your problems, they will at the very worst be able to point you in the right direction and give you advice on where to start.

If you have a particular problem such as debt or you are concerned about losing your home it can often be very difficult to know where to start. Even if you start with the Citizens Advice Bureau this will likely put your mind at rest regarding help and will also show you that you are not alone at this moment in time. As you can see from the above figures, the fact that one case every minute is recorded by the Citizens Advice Bureau in Scotland is a perfect example of the help offered.

Financial trouble

More and more people are now struggling to meet their outgoings as their income comes under pressure. As we have mentioned on numerous occasions, while there are a host of options available including trust deeds, debt payment plans, private arrangements and even bankruptcy, before you know where to go you need to know where you are. This may sound very straightforward but until you know the options available to you it can be difficult to know where to start.

Employment issues

It is not only the cost of living which continues to rise as the economic climate darkens yet again with businesses also struggling with reduced income, increased overheads and very often a requirement to cut the workforce. While there are legal obligations with regard to employment and redundancies there are some desperate companies out there who have in some cases cut corners and acted out with the law. Therefore, the number of people now looking for advice on employment issues continues to rise and quite rightly they are being pointed in the direction of the various rules and regulations that are there to protect them.


It seems bizarre to think that we are talking about poverty in the 21st-century at a time when even though the world economy is under pressure there are some very rich countries out there. Yet again, there are laws, rules and regulations in place to protect those who have little or no income and while these should be fairly straightforward, very often they get complicated, experience delays and can be very difficult to understand. Taking advice if your income has dropped significantly with regards to benefits is a sensible route and for many people it is the only route. Nobody in the modern world should suffer from malnutrition or poverty, whether this is in underdeveloped economies or developed economies, and thankfully there are some safeguards to ensure this happens as little as possible.

Managing your debts

There are some people in Scotland at this moment in time struggling to repay their debts and cover their outgoings each and every month. In some cases while they are putting themselves under more pressure and potentially making themselves ill it may take a fairly small tweak of their finances to reduce the pressure. It is worth pointing out that not every case which goes before the Citizens Advice Bureau in relation to finances and financial trouble will result in a trust deed, bankruptcy or other debt management arrangement.

If possible, it makes sense for all parties involved to put together some form of debt repayment plan where applicable but if it is simply a case of cutting out some of the luxuries of life while your debts are reorganised then this is not a big price to pay. The truth is that many of us have become used to the good life and many of us continue to live beyond our means. Despite the fact that “easy credit” is no longer available across-the-board there are many people who have gorged on easy credit for many years and are now paying the price.

Take advice and listen to the advice

There is no point going to associations such as the Citizens Advice Bureau Scotland for advice about your finances, employment or other issues and not taking heed of the information given. Staff at the Citizens Advice Bureau Scotland has an array of different experiences, different qualifications and different skills which they use to point you in the right direction and assist as much as possible. It can be easy sometimes to pick up on an idea given to you and potentially expand it in your way when in reality you need to make a difficult situation as simple as possible.

There are many people who will stumble along with massive debts over their shoulders for many years when in reality perhaps the best course of action would have been some form of debt management arrangement. There is no point struggling for years with debts you cannot meet and eventually being forced to hold up your hands and give in. Act now and sort it!

Understanding credit card debt Wed, 29 Feb 2012 00:01:24 +0000 admin There are very few people in the UK who do not have some form of credit card service to hand and while this does not necessarily mean you will face financial problems in the future, you do need to be aware and understand how credit card debt works. The vast majority of people will spend money and pay off their balance at the end of each month but as the financial situation continues to tighten in the UK we are seeing more and more people paying off less and less of their outstanding debts at the end of each month.

Annual Percentage Rate (APR)

All credit card arrangements and credit card correspondence has to by law show the annual percentage rate applied to your debt and any penalties which have been received. However, many people do not seem to realise that while an annual percentage rate figure shows what you can expect to pay an annual basis, interest is actually charged on a monthly basis. Thereby, unless you pay off your outstanding balance at the end of each month you will see an interest charge added to your balance on which interest will be charged in the future.

It is therefore easy to see why some people fall into the financial trap of leaving a balance at the end of each month upon which interest is charged and then interest is charged upon the interest, etc. If your balance is fairly large for a relatively short period of time you can see the interest charge increase significantly.

Minimum payments

Each and every credit card available in the UK will have a minimum payment requirement which will be a certain percentage of your outstanding debt that needs to be paid on a monthly basis. If you do not pay the minimum payment you will be subjected to fines and penalties which will be added to your outstanding debt and, again, upon which interest will be charged in the future. Minimum payment penalties will vary between each card provider but even if the charge is £20 and you underpay your minimum payment for say six months then this will be an added £120 on your debt.

Very quickly fines, penalties, interest charges and other administrative fees can add up and for some people the ability to repay their outstanding debt in the short term suddenly disappears.

Your cheap debt is paid off first

While the authorities are looking to put through a number of regulatory changes in the short to medium term you need to be aware that for example if you have a 0% transfer balance to a new credit card and then spend additional money, which balance is paid off first? In a perfect world you would hope that the balance which attracts the interest charge is paid off first but unfortunately this is not the case. In many cases any capital repayments you make on your credit card debt will go towards the 0% transfer balance first thereby leaving your interest charging balance to increase.

This financial wizardry makes the UK credit card industry millions upon millions of pounds a year because once you have transferred over your 0% transfer balance you are likely tied in for a set period of time and dependent upon your provider. Each and every credit card provider in the UK is different therefore you should check the small print before you actually sign up and before you transfer any debt to a new credit card.

When cheap debt turns to expensive debt

It is very easy to flash your flexible friend when you are out and about in the knowledge that at the end of the month you will pay off your outstanding balance and everything will be fine. However, when you compare the interest rates on the average UK credit card, in the high teens (and over 20% in some cases!), this is very expensive debt compared to overdrafts and personal loans. Many people automatically assume that credit card debt, assuming you pay off your balance at the end of each month, is relatively cheap, and in this situation it is, but the truth is that credit card companies want you to spend money so that they can make money.

If there is very little in the way of a gap between your income and your expenses then you do put yourself at risk of financial problems in the future if the economy as a whole was to change. If you see a squeeze on your income and your expenses increase then there may come a time when you are not able to pay off your credit card debt at the end of each month. Even if you leave a relatively small balance you would be charged interest upon this and very quickly only the minimum payment will be a real option for you. This will leave more and more debt on your credit card at the end of each month, increase interest charges and very quickly the situation can run away from you.

Keep your spending under control

One of the simplest ways to ensure you do not overspend on your credit card is to leave it at home once in awhile. This may sound absurdly simple but the truth is that if you do not have access to your credit card then quite simply you can’t spend on your card. It is very easy to flash your credit card at Christmas, birthdays and other special occasions but in the past, before credit cards were so common, many people would have saved up for these special occasions. Is there really anything wrong with saving up for a special occasion and cutting back on your expenditure in the short term?


While millions upon millions of people in the UK have access to credit cards there are many who do not fully understand the workings of the credit card industry. You need to be aware of which debt is repaid first, i.e. the lowest interest debt, any penalties, the APR and how quickly a situation can move out of control even if you miss just a couple of months of payments. Credit card debt is by far and away the biggest problem for the UK insolvency industry and despite warnings from the government and various consumer agencies it seems that many people are still happy to jump into bed with their flexible friend.

Debt addiction is a serious problem Tue, 28 Feb 2012 00:01:46 +0000 admin To the vast majority of us the thought of spending money which we cannot afford might be alien but the truth is that there are millions of people in the UK with an addiction to debt. This is a serious and a growing problem which needs to be addressed sooner rather than later before more and more people literally ruin their financial futures and put themselves under, sometimes, insurmountable pressure.

What is debt addiction?

Debt addiction is simply an inability to comprehend what you can afford to spend against what you actually spend, i.e. overspending. There are many reasons why people will overspend and pile up the debt on their credit cards and their overdrafts and the truth is that some people do not even realise they are doing it. The “head in the sand” phenomenon seems to kick in and they spend, spend, spend not even contemplating how they will pay back their debts.

This is the reason why we see so many people having enormous debts compared to their relatively small incomes and why many people blame the financial institutions for this terrible phenomenon.

Living a life beyond your means

There are many times when each of us will spend something which we know we cannot afford in the short term but it feels good and it feels right. Whether this is buying a new couch, new car or even a holiday, at the time it does feel right and in many ways we do kid ourselves that we deserve it. However, while there is not necessarily anything wrong with treating yourself once in a while it is when these “treats” become more common and cost more money that a containable problem is let out of the box.

Not reacting to a change in circumstances

Especially in the current economic environment, one issue which seems to be mentioned more and more is the fact that some people find it difficult to react to a change in their circumstances and their finances. This is the scenario whereby perhaps income has dropped significantly, employment has been lost or perhaps a large debt has been repaid leading to a shortfall between your current standard of living and your income.

Whether it is a case of “keeping up with the Joneses” or indeed kidding yourself that the situation will rectify itself in the short to medium term, the number of people who’ve got themselves into financial debt because they have not reacted to a change in their income and their finances will amaze you. You also need to bear in mind that if you go to court to apply for some kind of debt repayment plan or trust deed in Scotland you will have to justify why your debt increased when your income obviously could not cover your ongoing expenditure.

The property market

While more and more people in the UK are struggling to even get on the first rung of the property ladder there are some people who are literally clawing themselves to the top of the ladder on incomes which leave very little in the way of flexibility. It is all good and well having a big house, numerous bedrooms and ensuite bathrooms but sometimes we need to think about what might happen if the property market turned against us.

The chances are that if the property market was in freefall there would be serious economic issues within the country and unemployment would grow. These factors can come together and causes serious financial problem for many people with a rise in the cost of living, a reduction in income and a fall in the value of your property. In more traditional recessions and difficult economic times these situations can rectify themselves fairly quickly but as we have seen over the last few years this is not always the case.

Wake up and smell the coffee

The vast majority of people who have some form of addiction to debt will in the back of their minds realise that what they are doing does not make sense. It is only when this addiction to debt and this addition to spending is overtaken by a fear of their financial situation and how this may pan out that anything will be done. For many people this situation will occur far too far down the line to stand any chance of rectifying it without some form of professional financial advice.

Depending upon where you live in the UK you can apply for some form of debt management, debt counselling, trust deed in Scotland or even bankruptcy. These are options which for many people over the next few years will be a reality and will certainly force them to wake up and smell the coffee.

Learn from history

History show the UK is littered with millions upon millions of people who have overextended their finances in the hope that they will pay off tomorrow what they have spent today. However, very often these growing debts can grow out of control and before you know where you are the vast majority of your monthly income is being spent on financing your debt without even paying off the capital. These are situations which not only affect your financial well-being but can have a terrible physical and mental impact upon your everyday life.

What to do if you have an addiction to debt

The first thing you need to do if you have an addiction to debt is to admit to yourself that you have a problem and immediately seek professional financial advice. If you sit down by yourself and look at your expenditure, your income and your assets there is every chance that you will be astounded and shocked by your financial situation. Depending upon how quickly you wake up and smell the coffee there are a number of different routes to consider which will reduce the immediate financial pressure and go some way towards sorting out your long-term problems.

Once you have admitted to yourself that you have a problem with debt there is every chance that you will resolve the issue but this will be the major turning point and for many people the most difficult realisation.

Consumer debt solutions Mon, 27 Feb 2012 09:24:31 +0000 admin As the economic crisis in Europe and throughout the world continues to deepen consumer debt solutions are being sought by more and more people in order to relieve not only financial stress but also mental stress. Many of us forget that the pressure of being in debt and struggling to finance these debts not only affects our finances in the short term but can also lead to physical and mental pressure which can tip some people over the edge. Therefore it is vital that if you are struggling to finance your debts you should look towards the most relevant consumer debt solution for you.

Debt Consolidation Scotland

Debt Consolidation in Scotland is becoming more commonplace with many people finally admitting there are struggling to pay their debts and looking to consolidate these into one affordable loan. However, if you are looking towards debt consolidation it is vital that you take professional financial advice because in many cases you may struggle to actually pay off the long-term debt consolidation loan.

There is no point taking on a debt consolidation loan if you’re unable to afford it because it will only delay the inevitable and you will need to take further action. The initial lift you may receive upon thinking that you have resolved your immediate financial problems could turn into an even worse situation and leave you at rock bottom.

Trust deeds Scotland

Trust deeds in Scotland are a unique way of ring fencing all your debts under the management of a court-appointed trustee and paying back only what you can afford during the time of the trust deed. Trust deeds are not for everybody and again you will need to take professional financial advice to see that you are taking the correct route but there is no doubt they have attractions because after the five-year tenure of the trust deed the idea is that any outstanding debt is written-off.

In order for a trust deed to be successfully put in place your existing creditors will need to vote in favour of the transaction. Current regulations state that if more than one third of the value of your debts vote against a trust deed or 50% of the number of creditors then your trust deed will not go through. In reality if you are in financial trouble there is little reason why your creditors would not vote in favour of a trust deed whereby they would at least see some return on outstanding debts.


Bankruptcy is an option which many people fear most but in reality it is perhaps the right course of action for some people. Under guidance from professional financial advisers you need to look at your overall finances, overall income, overall assets and your overall expenses. If you are struggling to finance your debts or perhaps you have lost your job in the short term this could lead to significant pressure upon your finances, your physical well-being, your mental well-being and your family life. It is therefore vital that you take the correct course of action if you are struggling to survive on a daily basis.

It would be wrong to suggest that bankruptcy is the easy option because indeed not all bankruptcy applications will be successful. There are also drawbacks with regards to your credit rating, access to credit in the short to medium term and other issues to take into account. However, for those desperate enough to consider bankruptcy, and indeed for those where their situation does warrant it bankruptcy action, access to credit in the short to medium term should not be your first priority.

What are the main reasons for consumer debt?

There are many reasons why consumers seem to fall into the debt trap and while very few of these happen overnight they are more common than you would expect. Some of the main reasons why consumers fall into debt include: –

Credit card debt

Credit card debt is perhaps one of the major reasons why the vast majority of us fall into financial trouble. It is very easy to flash your flexible friend when you need something which in reality you know you cannot afford at the time. The ability to buy now and pay later is too much of an attraction for many people and indeed Christmas is a time of year when many people overextend their finances and end up paying them back for months if not years to come.

Even though there have been some changes in credit card interest rates there is no doubt that they are potentially disastrous if you have a significant outstanding balance. Some credit card companies will charge you in excess of 20% per annum on outstanding debt and if you are unable to cover the interest charge on a monthly basis then this will be added to your outstanding debt and your debt will grow and grow.

The good life

It seems bizarre to say that many people get themselves into financial problems purely and simply because they live the high life when their finances cannot afford it, but it is the truth. There is competition in all areas of life and many people prefer to put on some kind of front suggesting they are “wealthy” when in reality they are living a life dominated by debt. While these are situations which should be the easiest to resolve, i.e. only spend what you can afford, very often the debt mountain is far too big to finance before some people come to their senses.


Gambling and the “good life” are two issues which may block the agreement of any trust deed in Scotland as a way of sorting out your finances. This because the authorities deem these two issues to be self-inflicted and creditors are of the opinion that why should they help of somebody who was overspent on purpose. In reality we can all see where they are coming from but addictions and other pressures in everyday life can lead to many people doing things which they would not normally consider.

However, if you are financial in trouble because of gambling or overspending in relation to the “good life” then you need to be aware that sorting out your problems may not be as easy as you would hope.

What if your debts keep going up? Sun, 26 Feb 2012 00:01:57 +0000 admin For those in deep financial trouble there will come a point, a tipping point, when you are unable to finance your debts and cover your basic cost of living. Indeed in this situation you may see your debts continue to increase purely and simply because of penalties, fines and interest charges. But what you do if your debts keep going up?

Debts keep rising under a trust deed

In Scotland there is a trust deed service available which effectively allows you to put together all of your debts, your assets and your income and an appointed trustee will effectively take control of your financial life. They were put together a repayment plan where applicable and they will also monitor your spending on an annual basis although you are legally obliged to tell them of any significant changes in your finances at any stage.

If under the trust deed you see your debts continue to rise, despite the fact that your reported debts will be frozen when the trust deed is confirmed, there is something wrong.

Are you taking out more credit when in a trust deed arrangement?

One of the main gang planks for any trust deed, and indeed any financial arrangement, is the restricted access to credit during the time when you are trying to sort out your finances. If your debts continue to rise despite the fact you are in a trust deed then you are either spending more than you are bringing in, extending your budget beyond that agreed with your trustees or you have taken out further loans or credit which have not been disclosed. If this is the case it is imperative that you contact your trustees as soon as possible and try to work out a way forward.

The whole point of taking out a trust deed is the fact that a line is drawn under your debts and there will be no more penalties, no more fines and no more interest charges. If you are seen to be abusing this particular service then you will be in serious danger and may be forced to look at other alternatives.

Living within your means in a trust deed

Just because you have taken out a trust deed and your finances are effectively controlled by a court-appointed third-party this does not mean you cannot live a life. The trustees are more than happy to allow you to put aside income to cover your everyday expenses but they will not allow you to live an extravagant life or gamble. You need to be seen to be doing your part with regards to this debt repayment arrangement and if this is not the case then it will be taken out of your hands.

It is worth noting that while the trustees will assist you as much as possible they also have an obligation to creditors who have agreed to write off a significant amount of debt in relation to the trust deed arrangement. It is this duty to creditors which ensures that you must inform your trustees of any changes to your financial situation as soon as it happens because if they find out via third parties they will penalise you and you are strictly speaking breaking the law.

Speak to your trustees on a regular basis

The trustees of your trust deed will be in regular contact with you although in reality they should not need to meet you more than once a year. You may well be contacted to arrange a meeting to discuss your finances, your income, your expenses and any changes which may have happened over the last 12 months. In many cases this is just a case of rubberstamping an ongoing service and an ongoing situation and there are unlikely to be major changes to any repayments you are obliged to make. They will go through the traditional questionnaire which is required by law and they will ask questions about your standard of living and your expenses.

If you have any questions about credit, financial arrangements or even debts which have arisen after the original trust deed was created, you need to contact your trustees as soon as possible. They’ll know exactly what to do in any situation and when you consider the pressure and the strain you had probably been under it is very beneficial to contact third parties who know what they are talking about. There is no point in worrying over something which is out of your control when there are trustees available to give you on the spot advice.

Trying to work out your monthly expenses

For the vast majority of us it will be almost impossible to sit down today and jot down our monthly expenses to the nearest £50. The truth is that our monthly budget and our monthly expenses do change from month to month and taking account of all of these changes is not easy. However, the trustees associated with the trust deed service in Scotland have experience in putting together monthly budgets for those in financial trouble.

They will know roughly what you would spend on clothing, electric, gas, petrol, heating, food and other everyday expenses whether you are single or perhaps part of a larger family. They will not expect you to live a life where you have nothing in your pocket but they will again not expect you to live an extravagant lifestyle and fritter away any income you earn in the future.


If after arranging some kind of debt repayment scheme you find that your debts continue to rise then either you are spending more than you agreed with your trustees are you have not confirmed all of your debts. Either way if you are finding it difficult to cover any prearranged debt repayments then you do need to speak to your trustee sooner rather than later and inform them of your changing situation.

Remember, while the trustees have an obligation to the creditors they also have an obligation to debtors and they will do everything in their power to help you. But you need to play your part and inform them of any changes as soon as they happen.

Man who gambled £800,000 receives bankruptcy restriction order Sat, 25 Feb 2012 00:01:50 +0000 admin A man from Lockerbie who gambled away a massive £800,000 over a two-year period has received notice of a bankruptcy restriction order which could impact upon the future life of Graeme Calvert. The case was taken to the courts where the sheriff in charge awarded a bankruptcy restriction order which will effectively restrict Mr Calvert’s access to credit, access to business and the type employment he can take in the future.

Background to the case

It is believed that the accused received £400,000 from Dumfries & Galloway Council which was meant to pay VAT bills on a nursing home he ran. However, when the Scotland insolvency service became involved it very quickly became apparent that over £800,000 had been gambled away over a two-year period. This included the £400,000 which the defendant had received from the council in relation to VAT bills on the nursing home.

Gambling is one of the few activities which can be subjected to a bankruptcy restriction order and the order will last for nine years in this case and could have a major impact upon Mr Calvert’s life.

What is a bankruptcy restriction order?

Effectively a bankruptcy restriction order is granted when the defendant is accused of living an extravagant lifestyle or gambling away funds which could have been used to pay off creditors. In this case the order will last for nine years and restrict access to credit, business opportunities and most alarmingly it does also give the authorities the legal right to alert potential creditors and employers in the future about the individuals “inappropriate” behaviour.

The seriousness of this particular situation should not be underestimated because while bankruptcy regulations are in place to help those who are struggling to pay their debts, they do not reward those who have lived an extravagant lifestyle or gambled away their funds only to expect their creditors to pick up the tab. It is interesting that this particular case has received widespread publicity at a time when bankruptcies, trustees and other forms of debt management are becoming more commonplace than ever before. Are the authorities trying to send out a message that legal bankruptcy petitions will be honoured while those who have been seen to live an extravagant lifestyle or gamble with their funds will receive further restrictions?

Accountant in bankruptcy

The accountant in bankruptcy is effectively in charge of all bankruptcies in Scotland and they can, as in this particular case, apply to the court for further restrictions if they feel appropriate. The case will go before a sheriff who will rule on the merits of the case and in this particular instance a nine-year restriction order was put in place. In effect the accountant in bankruptcy can apply for any type of restriction they see relevant to the case and there is no standard restriction period.

This particular case also shows that the accountant in bankruptcy in Scotland is very much on the ball and more than willing to recover old bankruptcy agreements if there have been abuses of the system. This will be a welcome announcement for creditors, especially banks, across the UK who have seen a massive increase in bankruptcies and other arrangements over the last few years. Whether or not we will see other bankruptcy agreements brought back for further consideration remains to be seen.

Abuse the system and you will pay the price

There are various failsafe systems in place in Scotland which include bankruptcy, trust deeds as well as debt arrangement schemes which are available to assist those in serious financial trouble. It will depend purely and simply upon your financial situation as to which of the various arrangements is applicable and as we have mentioned on numerous occasions it is vital that you take professional financial advice as soon as possible.

As soon as you approach a professional financial adviser about your situation you should be made aware of the various pros and cons of the above debt repayment arrangements. Bankruptcy is obviously the most serious of the arrangements available and it would be preferable for both creditors and the individuals involved to try and arrange some kind of formal repayment plan. This may see the debtor repay only a small percentage of the overall debts but it can help to protect various aspects of your financial life going forward.

Can you reduce your spending in times of trouble?

Aside from those deemed to have been living an extravagant lifestyle or indeed been caught up in the gambling arena, there are many people who fall into financial difficulties having failed to rein in their spending in times of trouble. No matter what situation you are in there will be ways in which you can reduce your outgoings even in the short term and potentially at least partly rectify your financial troubles. There are some situations where tinkering with your monthly budget will not make a difference whatsoever and these are situations where you should seek financial advice.

However, if you’re feeling the pinch then you do need to look at your budget, your outgoings and your income and decide whether there are any savings to be made. If you can make savings in the short to medium term this may allow the economy to improve and hopefully the employment situation to follow suit, which will give you a better chance of rectifying your financial situation. However, sometimes there is no point in banging your head against a brick wall and if your situation is such that you are not able to afford your everyday basic living expenses and repay part of your debt then you do need to address the situation sooner rather than later.


While many people automatically assume that bankruptcy is available to anybody who has debt which they are unable to pay off, the situation is slightly different for those deemed to have been extravagant in their lifestyle or perhaps have spent significant amounts of money on gambling. These two later situations can lead to extended bankruptcy restriction orders which will limit access to credit, employment options and will even give the authorities the right to advise creditors or future employers about your extravagant lifestyle in the past.

In reality if you abuse the system then you will be made to pay the price, play the system the way it was set up and you will be okay.

Debt arrangement scheme Scotland Fri, 24 Feb 2012 00:01:33 +0000 admin As the problem of consumer debt in Scotland continued to grow the authorities brought in a new style of debt management program in the shape of the debt arrangement scheme Scotland. This effectively attempted to sidestep the rigmarole of court activity and court applications for relatively small debts thereby allowing those struggling to have a swift resolution to their problems and visibility going forward.

In simple terms a debt arrangement scheme (DAS) allows the creation of a debt payment program (DPP) which is put together by professional financial advisers. There are five elements of the debt arrangement scheme which include: –

The debtor

The debtor is the individual who is having financial problems and they will have agreed to a debt payment program approved by a debt arrangement scheme approved money adviser.

DAS approved money adviser

The DAS approved money adviser is someone who is approved by the regulatory authorities and is able to give debt management advice and apply for a DPP on behalf of the underlying customer.


Creditors are those who are owed money by the underlying customer and who have agreed or are obliged to accept a payment plan under a DPP.

DAS administrator

The DAS administrator is responsible for maintaining the DAS register and approval of all DPP agreements. They play a central role in this particular process and will have the final say on a DPP.

Payments distributor

The payments distributor as the name suggests is in charge of ensuring that money gathered under the DPP is paid to the creditors who are part of the scheme.

Can I apply for a debt arrangement scheme?

In many ways a debt arrangement scheme is very similar to a trust deed although it is very much simplified for those with more straightforward financial situations. It is very different from a bankruptcy arrangement as a DAS will allow the debtor to arrange a payment program with their creditors whereby they pay off as much of their debt as possible over an extended period of time.

This will give the debtor protection from creditors who would not be able to take any action against them while the DAS is in place. It is also worth noting that interest, fees and charges on the underlying debt are frozen at the time of the DAS thereby ensuring that a difficult situation does not become any worse.

How much does a DAS cost?

The debt arrangement scheme is a government funded operation which is there to help tackle the ever-growing debt problem in Scotland. It is free to debtors who will receive confidential financial advice although if you approach accountants and other professional bodies there may well be charges associated with the advice they give you. Therefore, it is worth seeking the free advice initially to see whether a DAS is for you and to see exactly what you need to do and the timescales involved.

There is a charge for creditors who agree a debt payment program under a debt arrangement scheme with an application fee of 2% of the overall debt and payment distribution fee of 8% of the overall debt. Therefore an initial 10% is effectively written off from the outstanding monies owed to creditors who will receive a maximum of 90% of the money owed to them.

Criteria for taking out a debt arrangement scheme

The criteria for taking out a debt arrangement scheme are fairly straightforward and are as follows: –

The individual must be resident in Scotland

The individual must have taken advice from a DAS approved adviser

There must be a willingness to repay part of their debts without the threat of creditors taking legal action

There must be a basic level of disposable income available to cover every day living costs

There are a number of people who will be excluded from taking out a debt arrangement scheme with the criteria as follows: –

People who are party to a protected trust deed

Individuals who are either bankrupt or subject to bankruptcy restrictions

Individuals who have other debts outside of the proposed DAS application will need to take professional financial advice about their eligibility

Debtors who are subject to a time to pay direction will need to be reviewed and professional advice taken before confirming eligibility for a debt arrangement scheme

It is possible to take out a joint debt payment plan under the following criteria: –

A husband and wife living together

A civil partnership living together

A partnership with the characteristics of a husband and wife relationship

Managing debt going forward

We have covered the basics of the debt arrangement scheme and the debt payment program which are both very important introductions by the Scottish government. Effectively they simplify the process of debt management via a government controlled agency and offer free advice for those looking to resolve any financial issues.

Some experts believe that the reduction in bankruptcy and trust deeds in Scotland over the last few months is directly as a result all the government’s debt arrangement scheme and the underlying issue is not going away. The truth is that so long as the authorities make it as simple as possible for those in financial trouble to seek advice and to try and rectify their situation then does it really matter what route they take?

At the end of the day it is down to each and every individual to maintain and manage their own finances and where applicable to take advice regarding potential problems. It is very easy to take a step back and assume that everything will “turn out right in the end” but the problem is that the current economic situation is set to last for some time yet. Therefore we all need to take responsibility for our own individual situations and ensure that we are looking towards the best path for long-term resolution.


The introduction of the debt arrangement scheme and the debt payment program is a major development in recent years. It shows that the government is willing and able to tackle the ongoing issue of debt in Scotland and indeed many people will now feel more comfortable taking advice from a government agency as opposed to looking towards the private sector where costs can be significant.

The downsides of a Trust Deed Scotland Thu, 23 Feb 2012 00:01:25 +0000 admin While there are many positive elements associated with Trust Deeds in Scotland which tackle the issue of debt and insolvency, there are also some downsides which you need to be aware of before you make your decision. These are not major issues in the long run but they are things which you will need to balance up in your own mind to see which option is best for you.

What is a Trust Deed?

Before we look at the negative points of Trust Deeds it is worthwhile remembering exactly what a Trust Deed is. It is basically a legally binding agreement between an individual and the courts which sees a trustee appointed to overlook your assets, your expenditure and your income. They will have full control of your financial life and they will also address and communicate with any creditors. If for some reason your financial situation was to worsen or indeed improve you are legally obliged to inform them of this.

The trustee of your Trust Deed will put together a payment plan which will allow you to at least pay back some of your debts if you can afford this. After the Trust Deed is over your debts will be written off and you will regain control of your financial life.

Downsides of a Trust Deed

There are not too many negative aspects with regards to a Trust Deed when you look at the overall picture and the financial and emotional stress you are likely to have experienced.

Your assets and your liabilities

As we touched on above, as soon as you agree a Trust Deed with the courts and a trustee is appointed your assets and liabilities will effectively be under their control. They may well ask you to dispose of some of your assets to pay off part of your debts and put together a repayment plan or they may well decide that you are not in a position to repay anything toward your existing debts.

What assets will you retain under a Trust Deed?

The debt market has changed dramatically over the last few years and there is now more consumer protection than ever before. Once you sign your Trust Deed your creditors will not be able to contact you direct and information which lands on your doorstep should be passed directly to your trustee. If asset were to rise after you assign the initial Trust Deed agreement you may well need to dispose of these or part dispose to pay off some of your debts.

Many people have major issues with regards to housing and the equity which they may well have in their home. It will be down to the trustees to decide whether you are forced to downsize your home but in reality you will not be left homeless and you will not be left on the street.

What do I need to declare under a Trust Deed?

Aside from the initial agreement where you will detail your assets, income and liabilities you also have a legal obligation to declare any changes in your financial situation and any windfalls you may receive. This is also relevant if your financial situation was to worsen so it is something of a double-edged sword. However, be warned, if you do not declare a significant improvement in your financial situation to your trustee’s and they were to find out via a third party at a later date you could be in serious trouble. They could impose fines, increase your repayment plan payments because in simple terms, this is illegal.

Will a Trust Deed affect my credit rating?

The simple truth is that once your debts have been frozen, interest accruals ceased and a Trust Deed has been put in place you will see a detrimental impact upon your credit rating. While the financial community has by signing the Trust Deed given you the opportunity to at least address part of the issue it would be foolish to allow you access to credit arrangements in the short to medium term. Indeed, how would further credit arrangements and loan agreements help you to reduce your debt when in fact you would be increasing it?

There is some debate as to how long a Trust Deed arrangement will impact your credit rating but the truth is that you will need to rebuild your rating once your Trust Deed is over. You may have a five-year period under which you will have restricted access to credit arrangements but this should more than give you enough time to get yourself back on your feet and rectify your financial problems.

Stick to your budget or else!

Under a Trust Deed your trustees will work out a lifestyle budget which will take into account your liabilities, ability to repay part of your debts, your income and your cost of living, whether this is for yourself or your family. There is significant scope to allow you to live a life with a social budget as well but you may well have to cut back on the luxuries of life in the short to medium term. You will very quickly need to learn how to stay within your budget limits and to ensure that your financial situation does not get worse by overspending.

If you are having issues with your Trust Deed agreement and believe that your lifestyle budget needs adjusting then you should contact your trustees as soon as possible. While there is a need to balance the fact you may have significant debts against the fact that you need to live there is some scope given to the trustees to help.


There are many long-term upsides to a Trust Deed arrangement and indeed while there are some downsides these are very minor in the overall picture. You will need to declare your assets, liabilities and income to your trustees, you will see your credit rating impacted by a Trust Deed agreement and you will need to stick very carefully to an agreed budget. However, when you balance off these “negatives” against the fact that your debt would be written off after your Trust Deed arrangement has expired and you will no longer have your creditors knocking at your door, surely it is a small price to pay?

Bankruptcy numbers in Scotland rise Wed, 22 Feb 2012 00:01:18 +0000 admin There is no doubt that the current economic environment is very challenging to both individuals and companies and the news that bankruptcy numbers in Scotland have risen again was disappointing. However, it seems that the pace of increase in insolvency, bankruptcy and trust deed numbers is slowing down amid signs that they have possibly peaked in the short term.

Bankruptcy numbers in Scotland

It was revealed that bankruptcy numbers in the third quarter of the 2011/12 tax year were up by 5% compared to the same period last year with 2615 bankruptcy awards in Scotland. While on the surface this figure does seem disappointing it is worth noting that there is a lag between economic instability and bankruptcy numbers. Indeed it can take many years for financial problems to work their way through the system and for individuals to find the correct path to address their debts.

Insolvency numbers in Scotland

Interestingly it was revealed that insolvency numbers for individuals in Scotland increased by just 2% in the third quarter of 2011/12 compared to the same period 12 months prior. A total of 4664 individuals were deemed to be insolvent and there debt issues are currently being addressed by the relevant parties. This 2% increase is a distinct slowing down of the pace of insolvency numbers in Scotland which has mirrored the ongoing economic difficulties of the country.

Trust deed numbers in Scotland

At this moment in time there are no exact figures with regards to trust deed numbers in Scotland but it is known that the number of trust deed awarded fell by 20% in the third quarter of the 2011/12 tax year compared to 12 months previous. This is a significant reduction in trust deeds in Scotland and was welcomed by the political arena as the potential peak of problems. However, is this really the case?

Debt issues lag the economy

There is growing concern among professional insolvency practitioners that the recent “peak” in insolvency, bankruptcy and trustee numbers is nothing more than a respite between the last recession and the ongoing recession. It is common knowledge that debt problems for companies and individuals lag the economy by a few years as it can take this long for issues to arise and be addressed. So while the slowdown in insolvency and bankruptcy numbers, not to mention the significant reduction in trust deed awards, is welcome this is not the time to take our eye off the ball.

Controlling your debts

These figures seem to indicate a slowing down of financial issues regarding individuals in Scotland although on the ground many people will still be feeling the pinch. There is no doubt that monthly budgets are being stretched to the limit, unemployment numbers are moving higher and there is ongoing concern about the problems within Europe. When you also throw into the mix the Scottish independence issue, which many believe is causing some companies to reduce their investment in Scotland in the short term, there is potential for further difficulty for individuals and companies.

Living within your means

It is all good and well suggesting that those who are looking at potential financial problems should “live within their means” but many people have various fixed costs and families to look after. Therefore, if you are looking towards potential debt problems in the short to medium term you should address these issues sooner rather than later to give yourself the best chance of rectifying your problems or at least giving yourself a chance to recover in the future. There is no point burying your head in the sand and hoping that this will go away because there is no doubt that more and more people will become insolvent, more and more people will seek the bankruptcy route and more and more people will make use of trust deeds Scotland.

Tackling your high interest debts

If you have various debts hanging over you which are causing you financial problems you need to prioritise the amount of money you owe against the interest rate it is attracting. For example, if you have a credit card which has a 0% interest offer for a set period of time then you may well be better off paying down your interest-bearing debt which will grow if left unattended. That is not to say that your credit card debt, at 0%, should not be addressed but if you can limit any potential short to medium-term increase in your debts then that is probably the best way forward.

Despite the fact that many people are feeling the financial pinch there are many people who have yet to actually sit down and look at their finances. Do you know how much you are spending each month? Do you know how much you actually bring home each month? Do you know what your fixed costs are each month?

Check your finances on a regular basis

You should regularly check your finances in the good times and bad times so that you can address any potential problems which may arise in the future. You may also find there are various standing orders and direct debits which are still in place but maybe you don’t need any more or indeed the services they paid for may well have expired. There are many people in the UK who are still paying direct debits and standing orders for services and goods which they no longer receive, are you one of them?

Do you check your bank statements?

Over the last few years it has become more and more apparent that ID theft and other forms of fraudulent activity are becoming more commonplace cross the UK. As a consequence you should check your bank statements on a regular basis to ensure that funds leaving your account have been accounted for and you are fully aware of what they relate to. Many fraudsters will sneakily take relatively small amounts of money out of your account on a regular basis under the guise of a common service which may well distract you from the underlying recipient.

Checking your bank statements on a regular basis will also allow you to comprehend where your money goes, where you can make savings and how your budget is actually balanced on a monthly basis.