What is a Trust Deed and how does it work?
If your debt spirals so much that it becomes unmanageable and living month to month is a struggle, you should act as soon as possible to resolve your situation.
Scottish residents have a number of options that can help lift you out of debt and start living normally again. One of the most popular options for Scottish residents is the Trust Deed.
A Trust Deed helps you get out of debt by appointing an insolvency practitioner (trustee) to act on your behalf to deal with creditors. Your trustee will propose one monthly payment that you are comfortable paying and provided your creditors accept these payment terms you can become debt free in as little as 48 months and write off a proportion of your debt.
Your creditors have 5 weeks to object the Trust Deed proposal from the date that your trustee sets it up. The only time your Trust Deed would fail to reach protection status is if your trustee receives objections from the majority of your creditors or if a creditor represents at least 1/3 of your debt.
Advantages of a Trust Deed
- You will never have to deal with any telephone calls or letters from your Creditors ever again as all communication will go via your Trustee.
- You will only ever make one manageable monthly payment towards your debts.
- If you own your home you may not have to sell it.
- On the sign off of your Trust Deed and reaching protection status, no further action against you can be taken by creditors.
- After four years, provided you have not breached your agreement, and adhered to the monthly contributions required, you will be debt free having paid back only a proportion of the money owed.
- You are likely to face fewer credit restrictions in the future compared to if you had entered Sequestration.
Disadvantages of Trust Deed
- No credit while on a Trust Deed
- For a period after your Trust Deed you may find it difficult to obtain credit
- If you fail to keep up with your payments you could be at risk of being made bankrupt
To qualify for a Trust Deed in Scotland, you must fit the following criteria.
- Scottish resident
- Have at least £5000 of unsecured debt
- Can meet a minimum repayment of at least £100 per month
- Are finding it difficult to maintain current repayments
- Have an income
The Trust Deed Process
- If you are struggling to live with your debts fill out the form on the right and a friendly advisor will call you to have an impartial, no obligation discussion. Even if you feel you are not ready to deal with your debts straight away the advisors will at least give you the best advice they can and explain the options to you.
- Our results page will give you an outline of your options but to proceed you will need to conduct a quick monthly budgeting fact find with a friendly advisor. At the end of this, they will let you know if you qualify for a Trust Deed based on your living situation and level of disposable income after all the deduction of all essential living costs.
- If you do qualify you will go through the drafting process and, if required, a home visit with an agent of the company will be arranged. You can then sign all the necessary documents, and everything regarding the Trust Deed will be explained to you before sign off. If you arrange a home visit be sure to prepare any questions and raise any concerns, regarding the Trust Deed.
- Your newly appointed Trustee will contact your creditors with your intentions to enter into a Trust Deed and aim to get the creditors to agree to the terms and conditions of the Trust Deed. At this point they will have up to 5 weeks to object the proposal, after this point it will become a 'Protected' Trust Deed meaning creditors will not be able to take any further action on you.
- You will then start your repayment program and your Trust Deed should typically run for 48 months depending on your circumstances. After which, you will be formally discharged, and you will be debt free.
A Trust Deed is not always the best option for everyone who is in debt. We will only recommend this option if we believe that it is the correct route for you to take. Remember you are not the only one who has ever had money worries. It's part in parcel with everyday life and no one should have to struggle alone.
We are here to help you. All you have to do is take the next step and ask.