Debt Advice Process

When you seek advice about your debts from an advice agency, it can be a worrying time. It is a big step and understandably people may be worried about doing so. You cannot predict the reaction you will get, and you don’t know if the people you are speaking to will be shocked or disapproving. On top of that, there is the mystery surrounding the debt advice process itself. What does it involve? What happens during it?

This last point can be even more worrying when you consider there are no shortage of examples of people receiving bad advice and, as a result, having their situation made worse. It’s not unheard-of for people seeking advice to be “sold” solutions by firms that confuse their interests with those of their clients. This can make someone’s situation worse.

Understanding the Debt Advice Process

It, therefore, helps to understand what “best practice” is in the debt advice process and how reputable organisations approach the debt problems of their clients.

The first thing to be clear about is advice agencies should never be judgemental and should always advise you on what’s in your best interests, not theirs. If you feel they are doing otherwise, seek advice elsewhere.

Some organisations, also operate different variations of the debt advice process. For some it is a five step process, whilst for other its a six or seven step process, but either way, regardless of the procedural variations, there are certain steps that all organisations should be following.

Armed with knowledge of the Debt Advice Process

ARMED is an acronym that can be used to help you remember what is best practice in debt advice in Scotland. It is a five-step process that covers the main steps that you should ensure are complete before you choose what is the best option for you. If you seek advice from an organisation that doesn’t complete these steps, you should seek alternative advice from another agency.

Debt Advice Process

Acquire all Relevant Information

The first step that any debt adviser should take before advising you on your debts, is to acquire all relevant information about your situation. This includes information not only about your debts, but also your income and expenditure and your living arrangements. This includes whether you own your own home or not, whether you live alone or not and whether you have children. It will also include whether anyone else in your home is working.

The adviser may also ask about your health and whether you are a carer, or about the health of other members of your household. This is because, although other household members aren’t expected to pay off your debts, you or other family members may be entitled to social security benefits. If the financial well-being of other household members can be improved, this may help improve your financial well-being.

Advisers may even ask about other family members, who are not part of your household, such as siblings or parents, as if they were to pass away and you are likely to inherit assets from them, such as a home, this can be relevant in helping you decide what is the best option for you.

Although it may seem many of the questions an adviser asks may appear unrelated to your debt problems, there are usually good reasons for them asking the questions. If you are in doubt why certain information is being sought, you should ask the adviser why it is relevant.

A good adviser should be able to explain why.

Respond to Emergencies

A good adviser should also check if you or other members of your family are facing any emergencies. This may mean facing an eviction or repossession of your home or even the repossession of items you have on hire purchase or conditional sale.

Other types of emergencies may be an imminent threat of legal action or enforcement action by sheriff officers. It could also include the fact you have insufficient income to get through to your next pay day or if creditors are harassing you. Where there are emergencies like these, the adviser should take steps to address them immediately, to ensure you don’t suffer unnecessary harm.

Maximise Income and Minimise Expenditure

The maximisation of someone’s income is a key part of the debt advice process, as is the minimisation of any unnecessary expenditure. This should be done as a matter of course, before someone is advised on any debt option, as otherwise they may receive the wrong advice.

For example, someone may be advised to go bankrupt, when if they had additional income, a less severe option may be appropriate.

Establish a Sustainable Income and Expenditure

Once income is maximised and expenditure minimised, a sustainable income and expenditure should be drafted to establish what it is a client can sustainably pay.

For example, if it is known someone will be retiring in a few years, or that their children will become adults during their solution, and that this will affect their income, then this must be considered when advising the client on their options. If a client is advised they must pay a certain amount for a certain number of years and it is foreseeable that this will not be sustainable, then it will not be best advice to advise that client on that option, without highlighting the risks of failure to them.

Discuss all Viable Options

It is only at this point, stage five in the debt advice process, once all the other steps have been completed, that it is possible to identify what are the viable options open to the client and for these to be discussed with them. These may include both formal and informal debt solutions.

They key point about the debt advice process is to ensure clients receive best advice and that their interests are protected.

Understanding what the debt advice process is, is important. It doesn’t mean you don’t need to seek professional advice, but it does mean you can be an active participant in it and ensure all the necessary steps are completed.

Readers Questions

  1. David


    I need advice on a debt problem, I could do with advice on how to cope with this.

    1. Scottish Adviser

      Hi David

      Thank you for coming on.

      As this site is more a personal blog site with information and advice that hopefully directs people in the correct direction, can I suggest if you need personal advice you give the National Debtline a call; or contact your local Citizen Advice Bureaux.

      Both links will take you to their pages and both services are free and confidential.

      They can also arrange for you to access face to face advice with a local service if you require it and provide personalised advice that will be tailored to your circumstances.

  2. Gemma


    I really need help.

    I am a single parent to 2 children and work full time earning a good wage.

    I struggle badly with finances, just trying to pay bills and childcare.

    I have received a letter threatening to arrest my wages for council tax and I worry about this everyday.

    There is no way I can afford to pay this: get to work, pay my bills and support my children if they begin arresting my wages.

    Can you give me advice please?

    1. Scottish Adviser

      Hi Gemma

      Thank you for coming on. I am sorry to hear about your predicament, but if it is any comfort to you, your situation is very common these days.

      Trying to juggle family and work committements is no easy task.

      The first thing I think you need to do is make contact with your local money advice agency, so that you can get some structured help to put things in order.

      The next thing I would do is get a full benefit check and make sure there is no other support you could be getting and are not receiving, such as help with child care costs and your council tax.

      I actually have a link to an online benefit calculator you could use yourself to get started. You can access this here.

      Second, you need to think about establishing a proper budget for yourself. The money adviser will help you do this, but you can also do your own. The Money Advice Service have one on their website you can use and that is accessible here.

      Thirdly, you may have to think about using the Statutory Moratorium procedure to protect yourself from getting an Earning Arrestment or Bank Account Arrestment.

      The Statutory Moratorium procedure is free to use and protects you for six weeks from any Sheriff Officer action to allow you to get advice. You can, however, only use it once a year, so I always suggest you speak to an adviser first so you know you will get an appointment within those six weeks, as you do not want to use it too early and then not be able to use it again later if need be. For example, if your local authority have not yet served on you a Charge for Payment (a legal demand for payment) using it now may be premature.

      However, you can then look at all your options, such as the Debt Arrangement Scheme . This allows you to pay all your debts off in one instalment per month, based on what you can afford, whilst freezing interest and charges and protecting you from any legal enforcement action.

      In terms of getting advice, if you visit the Citizen Advice Scotland page on Finding a Bureau, you will find your local Citizen Advice Bureau.

      Alternatively, all local authorities in Scotland fund local, face to face , money advice services that are free and, importantly, independent of their debt recovery departments. You can, therefore, contact them and ask they give you details of your local services.

      I hope this helps Gemma and please don’t hesitate to come back on if you need any further help.

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