Money advice
Money advisors help people to find a sustainable solution to their debt problems. They do this by, for example, carrying out income maximisation checks and ensuring that they are claiming all the benefits and tax credits to which they are entitled and supporting them to deal with their creditors (people who are owed money). This includes setting out options for the debtor (person who owes money), which may involve agreeing to pay their creditors through a Debt Payment Programme, or writing off debts through bankruptcy (sequestration).
Money advisors usually work for local authorities, for example, in the Trading Standards or Social Work Departments, or in voluntary agencies, most commonly Citizens Advice Bureaux. They may also be attached to employability programmes or work with organisations such as housing associations. The Scottish Government provides funding to local authorities to support free to client money advice. The local authority is responsible for deciding how to provide services, reflecting the circumstances in its area.
The Scottish Government funds national infrastructure for the money advice sector. This includes training for money advisors, accreditation to deliver the Debt Arrangement Scheme and specialist advisors to help front line advisors on more complex cases (second tier support). It has developed and promoted the Scottish National Standards for Information and Advice Providers, which cover housing, welfare rights and money advice.
Money advice has traditionally been delivered face-to-face with the client. The Scottish Government is funding new ways of delivering money advice by telephone or email, with National Debtline and Citizens Advice Direct. Money advice can also be accessed on-line.
The charities Scottish Debtline and Payplan also provide on-line and telephone debt advice.
The Debt Arrangement Scheme was established by the Debt Arrangement and Attachment (Scotland) Act 2002. Debtors who have multiple creditors can agree to a Debt Payment Programme (DPPs). Only approved advisors can set up these Programmes. While the Programme is in operation, creditors cannot take legal action to recover the debt (diligence). Interest on the debt is frozen while the Programme is in operation and written off when it is successfully completed.
Some people's debts are so large relative to their surplus income that there is no prospect of them being able to pay them off in a realistic timescale. A Debt Payment Programme is therefore not suitable for them. They may need to consider having the debt written off by making themselves bankrupt. People on low income with few assets can apply to the Accountant in Bankruptcy to be made bankrupt.
In 2005, the Scottish Government initiated a series of pilot projects, to test new ways of delivering money advice to groups which are particularly vulnerable to debt problems but which may have difficulty accessing mainstream services. This includes those entering or leaving employment, lone parents, young people, people with mental health problems or learning difficulties and prisoners. The research findings and full evaluation of these projects were published in 2007.