That is why setting one up is less bureaucratic than any statutory route, and it is also why the budget carries everything. How a plan works covers what happens once it is running.

Creditors decide whether to accept largely on whether the figures in front of them look real. Getting that right is most of the work.

A full debt list, evidence of income and an honest account of what your household spends. Which budget information you need goes through it in detail, and gathering it first saves several weeks later.

The paperwork

A provider will ask for the same things whether it charges fees or not. The evidence is what makes an offer credible to a creditor who has never met you.

Sort your debts before you go any further

Priority debts in Scotland are handled separately, because the consequences of not paying them arrive faster and hit harder. Which debts you can include sets out the split.

Council tax is the clearest example, because a council enforces by summary warrant rather than by an ordinary court action. Our council tax debt advice page covers what follows from one.

Both work, and the free options are real. Christians Against Poverty says all its services are completely free, and StepChange and National Debtline work at no charge too.

Anyone doing it as a business needs authorisation

CONC 8.1.1R applies the debt management chapter of the Handbook to every firm carrying on debt counselling or debt adjusting, and CONC 8.1.2G confirms that reaches not-for-profit bodies holding those permissions.

So authorisation is not a mark of a commercial firm. How to check a firm is authorised sets out what to look for on the register, including any limitation on the permission.

A Scottish client has a specific entitlement here

CONC 8.2.2G requires a firm to give appropriate advice to customers residing in the different countries of the United Kingdom, and refers to Principle 6 and the Consumer Duty.

So an adviser should be raising the Debt Arrangement Scheme, a trust deed and sequestration alongside a plan. The difference between a plan and the statutory scheme is the comparison to ask for by name.

Watch for firms that only collect your details

The Financial Conduct Authority warns that some firms should only take basic information about your debts and give factual information about products, and are not authorised to provide debt advice.

Six of them, and most of the work is in the first two. Nothing in the sequence is an application and nothing has to be granted.

The sequence

Ask your provider whether payments begin before every creditor has replied, because that varies. How a monthly payment is worked out covers the figure itself.

What is happening legally at each stage

What is binding is your contract with the provider, not the plan itself. The creditors are not parties to it.

The written contract is required by CONC 8.4.1R, and CONC 8.4.2R(5) requires it to set out the duration and conditions for exercising any right to cancel.

The rule that matters most at this stage

CONC 8.6.1R says that where a firm advises you not to make a contractual repayment before a debt solution is agreed, it must be able to demonstrate that the advice is in your best interests.

That is worth knowing if you are told to stop paying everything while offers go out. Ask why, and ask for the reasoning in writing.

Seven things, and they are all in documents you are entitled to before you commit. CONC 8.3.1R requires the pre-contract information in a durable medium, and it runs to fourteen numbered limbs.

The checklist

You should not be asked for money before the contract exists. CONC 8.7.6R prohibits requiring or taking a payment before the firm has entered into a contract with you, and prohibits fees being paid by credit card or another form of credit.

Fees, if there are any

There is no cap on what a commercial provider may charge, and whether plans are free or charge fees sets out the rule and the guidance that do apply.

Ask for the total cost, or the formula, in writing. Then ask what proportion of your payment reaches creditors in the first month, because that is where the rule is measured.

The same arithmetic, with you writing to creditors instead of a provider. National Debtline publishes Scottish guidance and template letters for exactly this.

What the label change means

The Financial Conduct Authority’s definition of a debt management plan assumes a third party administers it and distributes the money, so an arrangement you run yourself sits outside the defined term.

That does not make it a worse idea. It means the consumer credit rules about providers have nothing to bite on, and running a plan yourself covers what you take on instead.

What it involves in practice

• Work out the surplus, then decide how it is split between the creditors.
• Send each creditor the offer with a copy of the budget, and ask for interest and charges to be stopped.
• Ask for confirmation in writing, and keep a copy of everything you send.
• Pay each creditor separately, and review the arrangement whenever your income changes.

The trade-off

It costs nothing and you keep control of the money. Six creditors also means six standing orders and six sets of correspondence, and running one yourself is a real amount of work.

A plan does not stop enforcement. It has no statutory effect on diligence at all.

Setting up a plan is not the answer to a charge for payment

If a charge has been served, an arrestment executed or a summary warrant granted, that needs handling on its own terms. Whether a plan stops a wage arrestment is the page to read first.

StepChange’s own client agreement says creditors may continue collection activity including taking legal action, and that the charity will try to but cannot prevent it.

And Breathing Space is not available to you

Guidance written for England and Wales routinely offers Breathing Space at this stage. That is the Debt Respite Scheme and it has no application in Scotland.

A statutory moratorium runs for six months under section 198 of the Bankruptcy (Scotland) Act 2016, a period that replaced six weeks on 1 October 2022. Section 195(2) allows one in any twelve months, and section 197 sets out what it stops.

A statutory moratorium is the exception. It does not stop an earnings arrestment that was already running: section 197(5)(d) of the Bankruptcy (Scotland) Act 2016 lets a creditor carry on executing an earnings arrestment, a current maintenance arrestment or a conjoined arrestment order that came into effect before the moratorium began.

What does reach enforcement here

Section 9(2)(a) of the Debtors (Scotland) Act 1987 is the mandatory one, and section 197 is the moratorium. A money adviser can tell you which is competent on your facts.

When the arithmetic does not work. The free plan National Debtline refers clients to screens on two questions before anybody sets one up.

The two questions

Can you afford to pay at least £5 to each of your debts every month, and can you repay your debts within ten years. If either answer is no, a plan is unlikely to be the right shape of solution.

National Debtline’s Scottish guide goes further and says a debt payment programme under the Debt Arrangement Scheme is usually a much better option than a free debt management plan.

Why that is a Scottish point rather than a preference

Under the Debt Arrangement Scheme the freeze is automatic and statutory from the day you apply. On a debt management plan there is no freeze at all unless the creditor agrees to one.

StepChange says many creditors do stop interest. None of them has to.

And approval of a programme reaches diligence in a way a plan cannot. The Debt Arrangement Scheme is the route most plan clients have never had explained to them.

Get the options conversation before the paperwork

Citizens Advice Scotland, StepChange, National Debtline and Advice Direct Scotland all give it free, and what a plan actually is is worth reading before you commit to one.

Whichever way you go, get the key points in writing. What you will pay, what it costs, which debts are covered and what happens if your income changes.