Debt Management Plans In Scotland

A Debt Management Plan in Scotland is an informal way of managing your debts. The only solution that can be self-administered and less binding than a Debt Arrangement Scheme.

How do Debt Management Plans in Scotland work?

Debt Management Plans allow you to negotiate with your creditors and come to an informal agreement that allows you to freeze interest and charges and eventually pay off all your unaffordable debts.

In Scotland, the Debt Arrangement Scheme is a way of managing your debts and does allow you to have a legally-binding  arrangement with your creditors.

However, depending on your situation, there may be times where a debt management plan suits you better.

You can self-arrange a debt management plan yourself with your creditors. Some people choose to approach a fee-charging DMP provider to arrange this on their behalf. Likewise, some other people also allow a debt charity to organise the debt management plan for them, with varying levels of support.

Which debts can a Debt Management Plan in Scotland include?

You can use the debt management plan to pay off non-priority debts. These include:

✔️ Credit Cards

✔️ Payday Loans

✔️ Store Cards

✔️ Catalogue Debts

✔️ Personal Loans

✔️ Bank Overdrafts

✔️ Credit Unions

You can’t use your Debt Management Plan to pay off priority debts. Such as:

X Mortgage Or Rent Arrears

X Secured Loans

X Guarantor Loans

X Court Fines

X TV License

X Council Tax

X Utility Bills

X Child Support and Maintenance.

As the consequences of not paying some debts before others can be more serious, you need to split all your debts into priority and non-priority and also consider if you have any debt emergencies. A sudden debt emergency can be described as court or sheriff officer action. Or eviction for mortgage or rent arrears.

For this reason alone, it is always best to seek free, independent debt advice urgently. A debt adviser will be able to talk to the court, sheriff officer or creditor on your behalf.

Debt Management Plan Advantages

✅ Relief from creditor harassment.

✅ Reduced monthly payments.

✅ Avoids formal insolvency.

✅ Suitable for those with lower incomes and state benefits.

Debt Management Plan Disadvantages

❌  Creditors can reject your debt management plan proposal.

❌  Debt management plans are not legally binding.

❌  A DMP can take longer to complete as there is no fixed length.

❌  More expensive long term as you will be expected to pay off the full amount.

❌  Creditors can still contact you and add additional charges.

❌  Does still have a lesser impact on your credit history than other debt solutions.

Find Out More

Contact an expert money advisor at DAS Scotland to find out more about debt management plans and all the other debt solutions available to you in Scotland.

We are here to help you make an informed decision based on your affordability and support you every step of the way. If you would like a fresh start, get in touch today.

📞 0141 380 0588

🕕 You can also try using our Debt Repayment Calculator tool