Four of Scotland’s statutory debt solutions cannot be started by you at all. They have to be lodged by somebody who holds the right approval.

Here is who gives free advice, who counts as approved, what only an approved adviser can do, and what to have ready. Official guidance on debt and diligence in Scotland covers the statutory routes themselves.

National charities, national advice services, and your own council. Every one of them is free at the point of use, and none of them can charge you for a Debt Payment Programme.

Where to start

There is no single right door. What matters is getting to somebody who can lodge an application rather than only explain one.

All of them will want the same paperwork, so gathering it once serves whichever you choose. The list is at the end of this page.

Your council

A local authority employee working as a money adviser is one of the approved categories under regulation 4, so a council money advice or welfare rights team can act for you. Ask which team deals with the general public before you book.

That one question saves a wasted appointment. Ask as well whether the adviser can lodge a Debt Payment Programme application and grant a certificate for sequestration, because those are the two things approval unlocks.

Because approval is what lets an adviser lodge things. Without it, an adviser can explain your options and negotiate for you, but cannot make a Debt Payment Programme application or grant a certificate for sequestration.

Who counts as an approved money adviser

The categories for a debtor application sit in regulation 4 of the Bankruptcy (Scotland) Regulations 2016, and the Debt Arrangement Scheme has its own approval provisions in the 2011 Regulations.

A separate rule for a trust deed

A protected trust deed needs a trustee who is qualified to act as an insolvency practitioner, and who does not hold an interest opposed to the general interest of your creditors.

Insolvency practitioners are authorised by a recognised professional body. Ask which body authorises your trustee, and check the current list before you sign.

That is a different approval from the money adviser categories in the table above. An insolvency practitioner qualified to act under section 390 of the Insolvency Act 1986 is itself one of those categories, so one person can hold both.

A Debt Payment Programme, a debtor application for sequestration and the Minimal Asset Process all have to go through an approved money adviser. A protected trust deed has to go through an insolvency practitioner.

The gatekeeping rules, route by route

So the question to ask is not only what your options are, but who can lodge them. Which solution suits a wage arrestment sets out what each route does to deductions already coming off your pay.

The certificate for sequestration

It is a certificate confirming that you are unable to pay your debts as they become due, and section 9 of the Bankruptcy (Scotland) Act 2016 gives that power to a money adviser alone.

It lasts 30 days under regulation 10, so timing the sequestration application matters.

For the Minimal Asset Process the certificate is the only way in. A full administration application can rely on apparent insolvency instead.

A certificate granted too early expires before the paperwork is finished. Ask when yours will be granted and what has to be ready by then.

Check that the debt and the enforcement are right, apply for statutory protection, and lodge whichever solution your circumstances leave open. All of it at no cost to you.

Checking before applying

Ask for a written balance from each creditor, and for what has been added to it to be checked against your own paperwork. Where a wage arrestment is running, that includes the deduction line on your payslips.

What to do the day the notice arrives covers the first steps, and the arrestment paperwork is worth taking to the appointment with the payslips.

Supporting documentation for a programme application has to be no more than four weeks old when it is submitted. So the checking and the applying happen close together.

Applying for protection

A statutory moratorium gives six months of protection while the application is prepared, and you get one per rolling 12 months.

Whether a creditor can carry on an earnings arrestment your employer is already operating is treated differently in the Accountant in Bankruptcy’s adviser guidance from the general statement of the rule. Ask a money adviser to confirm the position on your facts before relying on it.

Dealing with sheriff officers

An adviser can correspond on your behalf, which changes who has to take the calls. What to do if sheriff officers knock covers the doorstep position.

The application route is the same whoever makes it, because the rules on who may apply and what may be charged are statutory. For an individual’s Debt Payment Programme, nobody can charge you for it at all.

The fee rules are rules, not policies

Regulation 17(1)(a) says a payments distributor must make no charge of any kind to a debtor. Regulation 5 forbids the Accountant in Bankruptcy’s own 2% fee being charged to you.

SSI 2019/315 regulation 4, in force 4 November 2019, set the distributor’s fee for an individual at 20% and provided that money advisers cannot charge fees. The 22% total comes out of the money distributed to creditors.

Business DAS works differently, and an insolvency practitioner will usually charge for a business application. What the Debt Arrangement Scheme is covers the fee arithmetic in full.

What to ask if you are quoted a fee

• Which approval the adviser holds, and which of the categories they fall into.
• What exactly the fee is for, given that the application route is the same.
• Whether the fee can be included in any solution, and if not, how it is to be paid.
• What a free approved adviser would do differently, and why.

Ask for the answers in writing. There is no route to a Debt Payment Programme or a debtor application that requires you to pay a provider.

A protected trust deed is the exception, because it needs a licensed insolvency practitioner as trustee. Those fees come out of your contributions rather than being billed to you separately.

It runs the statutory schemes and the public registers, decides debtor applications and supervises trustees. It is the administrator rather than your adviser.

The registers it keeps

The Accountant in Bankruptcy maintains the Register of Insolvencies and the DAS Register, and both are free and publicly searchable.

The Register of Insolvencies records sequestrations, protected trust deeds and moratoriums. The DAS Register records intimations, applications, approvals, variations and appeals.

The DAS Register holds personal details, including full name, any former name, date of birth and home address, under regulation 19(3). Information may be withheld from either register where inclusion would be likely to put someone at risk of violence or otherwise jeopardise anyone’s safety or welfare.

Where it decides rather than advises

It awards sequestration on a debtor application, approves Debt Payment Programmes as the DAS Administrator, and registers a trust deed as protected. Those are decisions on applications somebody else has lodged.

A sheriff decides a creditor petition, a Time to Pay Order and a statutory appeal. Neither body chooses your solution for you.

Three months of payslips or benefit statements, a list of every debt with a current balance, and any enforcement paperwork. The more of it you bring, the fewer appointments you need.

The paperwork

• Payslips for the last three months, or benefit award letters and statements.
• A list of every debt, with the creditor and a current balance beside each.
• Anything you have received about enforcement, including arrestment paperwork and any council statement broken down by year.
• A note of what you own, including any vehicle and a realistic value for it.
• Your rent or mortgage figure, and the current year’s council tax instalment.

Bring the payslips showing the deduction line as well as the balance. Those two together are what an adviser needs to test which routes are open to you.

The questions worth asking

Ask which routes your figures leave open, what each does to the deduction, and on what date. How to stop a wage arrestment sets out the steps that follow.

Ask what happens if your income changes during whichever route you choose. A Debt Payment Programme can be varied and carries two payment breaks, while a protected trust deed instead allows the payment period to be extended under section 168(2)(c).

An adviser maps your options against your figures, can apply for statutory protection while enforcement is running, and lodges the route you choose. Ask at that first meeting what has to happen before anything can be lodged.

What comes next

Verification comes before the application, and creditors are asked to confirm balances. For a Debt Payment Programme the supporting documentation has to be no more than four weeks old when the application is submitted.

Where insolvency is the answer, the protected trust deed and sequestration routes have their own timetables, and neither takes effect on the day you decide.

Keep paying what you can meanwhile

Continuing liabilities such as the current year’s council tax, rent and energy carry on regardless of which route you take. None of them can go into a Debt Payment Programme.

Where the answer turns out to be a Debt Payment Programme, the first payment is due within 42 days of approval, a deadline set by SSI 2013/225 with effect from 2 July 2013.