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- What are the signs a debt management plan has stopped working?
- Does the length of the plan on its own justify a move?
- What can a statutory solution do that an informal plan cannot?
- Which statutory route fits which situation in Scotland?
- What does your provider have to do when things change?
- What do you give up by moving?
- How do you decide, and who should you ask?
- Related guides
- Frequently asked questions
When the plan is not doing the thing you needed it to do. The three usual triggers are interest that has not been frozen, a payment that no longer fits, and enforcement the plan cannot touch.
A plan does not stop enforcement. It has no statutory effect on diligence at all.
Part of your pay is protected by law
The deduction is set by statutory tables, not the creditor
An arrestment can be stopped or replaced
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That last point decides more of these cases in Scotland than any other. An arrangement with no statutory backing cannot reach a diligence, and every statutory route can.
Plenty of plans work exactly as intended, so this is not an argument against them. How long a plan lasts sets out the arithmetic that usually decides it.
What are the signs a debt management plan has stopped working?
Balances that barely move, creditors that will not engage, and enforcement letters arriving anyway. Any one of them is a reason to get the plan reviewed.
The signals, and what to ask about each
| The signal | What it usually means | What to ask |
|---|---|---|
| The balances are barely moving | Interest has not been frozen on one or more accounts | Which creditors refused, and whether the arithmetic still works |
| A charge for payment or an arrestment has arrived | The plan gives no protection from diligence | Whether a statutory route or a time to pay order fits |
| Your income has dropped sharply | The payment is no longer sustainable | Whether the payment can be reduced, and what happens if it cannot |
| The projected end date keeps moving | Payments are not keeping pace with the balances | The total cost and duration on your last annual statement |
| A creditor has sold the debt on | Routine, and the new owner has to be brought in | Whether payments have been redirected correctly |
| Nobody has reviewed the plan for over a year | The provider is not doing what the rules ask | Whether a different provider or a different solution is the answer |
A review is not optional for the provider. CONC 8.8.1, which is a rule, requires a firm to monitor your position and to review, amend or terminate the plan at least annually or as soon as it learns of a material change.
Interest is the commonest of them
No creditor has to freeze interest because you are on a debt management plan. No statute requires it and no Financial Conduct Authority rule requires it.
National Debtline’s Scottish guide says the company has to persuade each creditor that a freeze makes sense, and whether a plan freezes interest sets out what the rules actually require.
A payment you cannot make is a separate question
A payment that has become unaffordable can usually be reduced without leaving the plan. Changing your payment when your income changes is the first thing to try.
Does the length of the plan on its own justify a move?
Not by itself. What matters is whether the end date is real, and whether the balance is falling at the rate the plan assumed.
A long plan is not automatically a failed one
A plan that clears the balances in nine years at a payment you can keep making is doing its job. Length only becomes the problem when the payment is a strain.
There is no maximum length, because there is no statute setting one. How long a plan lasts explains why the projection moves.
An end date that keeps receding is the real warning
If the projected finish is further away this year than last, interest is winning. That is arithmetic rather than a judgement about you.
There is no Scottish figure to measure yourself against
No published statistic counts how many people in Scotland are on a plan, or how many complete one. The Accountant in Bankruptcy leaves informal arrangements out of its statistics entirely.
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What can a statutory solution do that an informal plan cannot?
Bind a creditor who has said no, stop interest by force of law, and reach a diligence that is already running. A plan can do none of the three.
The four routes against the plan
| What you want done | Debt management plan | Debt payment programme | Protected trust deed | Sequestration |
|---|---|---|---|---|
| Freeze interest and charges | Only if the creditor agrees | Automatic on approval | Interest is not claimable in the trust deed beyond the date of granting | The debts are dealt with in the sequestration |
| Stop a wage arrestment already running | No effect at all | Recalled on approval, under regulation 33(1)(a) | Ends on the date of protection, under section 173 | Ends on the date of sequestration, under section 72(2) |
| Bind a creditor who says no | No | Yes, once approved | Yes, on protection | Yes |
| Write any of the debt off | No | No | Yes, whatever is unpaid at discharge | Yes, most debts on discharge |
| Appear on a public register | No | The DAS Register | The Register of Insolvencies | The Register of Insolvencies |
The recall on approval comes from regulation 33(1)(a) of the Debt Arrangement Scheme (Scotland) Regulations 2011, and notice of it goes to your employer.
The interest contrast, stated plainly
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 the two statutes that reach your wages
Section 173 of the Bankruptcy (Scotland) Act 2016 ends an earnings arrestment on the date a trust deed becomes protected, and section 72(2) of the Debtors (Scotland) Act 1987 ends one on the date of sequestration.
A plan reaches neither, and whether a plan stops a wage arrestment sets out what does.
Which statutory route fits which situation in Scotland?
That is decided by thresholds rather than by preference. Each route has statutory conditions and a plan has none at all.
The gateways
| The route | The threshold | When it fits |
|---|---|---|
| Debt Arrangement Scheme | No minimum and no maximum debt | You can repay in full over time and want interest stopped and diligence recalled |
| Protected trust deed | Debts of at least £5,000 at the date you grant the deed, in force 30 November 2016 | You cannot repay in full and can afford a contribution, and you accept equity is in issue |
| Minimal Asset Process | Debts of no more than £25,000, total assets of no more than £2,000, no single asset worth more than £1,000, and no land | You have very little and no realistic prospect of paying |
| Full administration sequestration | Debts of at least £3,000, under section 2(8)(a), in force 30 November 2016 | You cannot repay and do not meet the Minimal Asset Process conditions |
| Time to pay order | A debt of no more than £25,000 excluding interest | A single decree debt is being enforced and you want the arrestment recalled |
The trust deed minimum is in section 164(3), and the Minimal Asset Process conditions are in section 2(2) of the same Act, with the full administration floor at section 2(8)(a).
The £5,000, the £2,000, the £1,000 and the section 2(8)(a) £3,000 have all been in force since 30 November 2016. The £25,000 ceiling has been in force since 29 March 2021.
Watch the two different £3,000s in section 2. The one above is the debt floor for full administration, and the other, at section 2(3)(b), is the vehicle disregard in the Minimal Asset Process.
The time to pay order is the forgotten one
Section 9(2)(a) of the Debtors (Scotland) Act 1987 says the sheriff shall make an order recalling any existing earnings arrestment when a time to pay order is granted.
Not may, shall. For a bank arrestment the same section says only that the sheriff may recall it, so the wage arrestment is the one the law makes automatic.
The ceiling is £25,000 excluding interest, substituted with effect from 10 July 2000, and what a time to pay order is covers who can use one.
Two things you will read about are not available here
An individual voluntary arrangement and a Debt Relief Order belong to England and Wales. A page offering either to a Scottish reader is describing a different legal system.
What does your provider have to do when things change?
Review the plan and tell you the outcome. The rules point towards changing the payment rather than leaving a plan that no longer works.
The review duty
CONC 8.8.1, which is a rule, requires a firm to keep in contact with you, monitor your financial position, adjust the plan on a material change and give you a statement at least annually.
The same rule covers telling you where a creditor refused to freeze interest or charges accruing. That is the sentence to look for in your statement.
Advice has to fit the country you live in
CONC 8.2.2 is guidance, and it asks a firm to give appropriate advice to customers residing in the different countries of the United Kingdom.
For a Scottish client that means the Debt Arrangement Scheme, a trust deed, the Minimal Asset Process and sequestration. If none of those has been mentioned, ask why.
A payment break is not something a plan can promise
StepChange says it is not possible to get a payment break on a debt management plan or a token payment plan, and no other provider publishes a policy either way.
The statutory schemes do have breaks, which whether you can take a payment break sets out.
What do you give up by moving?
Privacy, and the ability to walk away. Both are real and neither is usually the deciding factor.
The register
The DAS Register is free to search and open to anyone, and it is kept by the Accountant in Bankruptcy.
Sequestration and a protected trust deed go on the Register of Insolvencies. A debt management plan appears on nothing, and that is the one thing it does better than any of them.
Assets come into it
A trust deed and a sequestration both deal with what you own, and a plan does not touch your property at all. Whether a plan or a trust deed suits a homeowner covers the equity question.
And the commitment is real
You can stop a plan this afternoon and nothing follows from it except the loss of whatever forbearance you had built up. A statutory solution is not ended that way.
That is the trade in one sentence: protection in exchange for commitment. The difference between a plan and sequestration sets out the far end of it.
How do you decide, and who should you ask?
Get a free money advice appointment and put your own figures through it. The decision turns on your budget and your assets rather than on the merits of any product.
Where to get it free
Citizens Advice Scotland, StepChange, National Debtline, Advice Direct Scotland and council money advice teams give this advice at no charge. StepChange and Christians Against Poverty can also run a plan for you.
Only an approved money adviser can apply for a debt payment programme, and moving from a plan to the Debt Arrangement Scheme sets out the steps.
The questions worth taking with you
- What the plan will actually cost you in total, and when it finishes.
- Which creditors have frozen interest and which have refused.
- Whether anything is already being enforced against you.
- Whether you own a home, and what it is worth against the mortgage.
- Whether your income is likely to rise, fall or stay as it is.
If enforcement has already started, say so first
That changes the order of the conversation, because a diligence already running is reached by some routes and not by others. Whether creditors can still take court action sets out the Scottish sequence.
And a moratorium can buy time to decide
A statutory moratorium lasts six months. The period was six weeks until section 23(2) of the Coronavirus (Recovery and Reform) (Scotland) Act 2022 substituted six months in section 198 of the Bankruptcy (Scotland) Act 2016, with effect from 1 October 2022.
One in any twelve months, under section 195(2). It ends early if a Debt Payment Programme is approved, and it can run past six months where an application has been lodged and not yet decided.
It stops new diligence and not one already running. Section 197(5)(d) lets a creditor carry on executing an earnings arrestment, a current maintenance arrestment or a conjoined arrestment order that was already in effect when the moratorium began.
Frequently asked questions
Is a long debt management plan a reason to move?
Only if the payment is a strain or the end date keeps moving. Length on its own is not a fault where the balances are falling and the payment is affordable.
My creditors will not freeze interest. What can I do?
You can complain, and ultimately go to the Financial Ombudsman Service, though no rule compels a freeze. Under the Debt Arrangement Scheme interest and charges stop by force of the scheme.
A wage arrestment has started. Does the plan help?
No. A debt management plan has no effect on diligence at all, and what stops an earnings arrestment is a time to pay order, an approved debt payment programme, a protected trust deed or sequestration.
Can I take a break from my plan instead of moving?
StepChange says it is not possible on its plans, and no other provider publishes a policy. The Debt Arrangement Scheme and sequestration both have statutory breaks with their own conditions.
Which statutory route needs the least debt?
There is no minimum for the Debt Arrangement Scheme. A protected trust deed needs at least £5,000 under section 164(3) and full administration sequestration at least £3,000 under section 2(8)(a), both in force since 30 November 2016.
Will moving put me on a public register?
Yes. A debt payment programme appears on the DAS Register and a trust deed or sequestration on the Register of Insolvencies, while a debt management plan appears on none of them.
Can I be made to move?
No. The decision is yours, though a provider can end its own arrangement and a creditor can petition for your sequestration where you owe at least £5,000 and are apparently insolvent.
Are an IVA or a Debt Relief Order options in Scotland?
No. Both belong to England and Wales, and the Scottish equivalents are a protected trust deed, the Minimal Asset Process and sequestration.
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Written as general information about Scottish debt law rather than regulated financial or legal advice, and your own circumstances may change the answer. Free, impartial help is available from Citizens Advice Scotland, StepChange, National Debtline and Advice Direct Scotland.