Sharon McDougall - Updated - 5th February 2024 - 2 minutes to read
Credit card debt can be very difficult to clear, particularly if you can only afford the minimum repayment each month. The high rates of interest charged by credit card companies can make the original debt increase to such an extent that it becomes unmanageable, especially when other debts are also involved.
This is where Scottish Trust Deeds can be invaluable in helping people escape debt, and avoid bankruptcy. So what do you need to know about credit cards and Trust Deeds, and could you be eligible for this debt solution?
A Trust Deed is an official debt solution available to Scottish residents. It allows you to pay off a proportion of your credit card debt over a longer period of time, and prevents creditors included in the Trust Deed from taking legal action against you.
The term of a Trust Deed is typically 48 months, during which time interest and charges are frozen. This allows you to repay a fixed sum rather than the debt increasing each month, as normally happens when only the minimum repayment is made.
A Trust Deed can protect your major assets, such as your home, and consists of a repayment plan agreed with your creditors. It’s legally binding on all parties as long as you maintain the agreed repayments. Any credit card or other debts remaining at the end of the term can be written off, providing you with a fresh financial start.
Get a rough indication of what your monthly repayments might be under each of our different debt solutions.
Can you use credit when you’re in a Trust Deed?
It’s unlikely that you’ll be able to take on more credit when you’re in a Trust Deed, as lenders will be extremely reluctant to sanction loans and other borrowing. It’s also highly advisable not to burden yourself with more debt, as it could jeopardise your chances of repaying the Trust Deed.
If you do take on more credit, it wouldn’t be included in the arrangement and you’d have to pay it back alongside the Trust Deed payments. Your repayments will have been carefully calculated to make them affordable once all essential living expenses have been met, so the extra liability could upset the balance of your financial situation.
If you would like more information on credit cards and Trust Deeds, please get in touch with the team at Scotland Debt Solutions. We have extensive experience of helping Scottish residents to deal with credit card and other debts, and can arrange a free, same-day meeting at one of our offices in Scotland.
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