What happens to my Trust Deed if I’m unemployed or lose my job?
December 20, 2018
The typical term of a Trust Deed is four years, so it’s quite possible a debtor’s employment situation will change during this time. If you’re in a Trust Deed and fear you may become unemployed, or have already lost your job, you need to know how it will affect your Trust Deed.
So let’s look at how a Trust Deed works, and whether such a fundamental change in your circumstances is catered for in this legally-binding arrangement.
How does a Trust Deed work?
A Scottish Trust Deed is an official insolvency procedure whereby you hand over control of your assets to a Trustee, and pay a single pre-agreed sum to creditors each month, typically for 48 months.
Repayments are designed to be affordable when the Trust Deed takes force, and the monthly amount is carefully calculated by an approved money adviser based on your income and essential expenditures.
It’s reassuring to know that a key factor of Scottish Trust Deeds, and a major benefit for those entering them, is the flexibility built in to the arrangement.
Losing your job whilst in a Trust Deed
If you become unemployed after you’ve entered a Scottish Trust Deed, you should inform your Trustee as soon as possible so they can take the necessary measures to prevent the agreement failing.
Scottish Trust Deeds are designed with some flexibility, which means the Trustee can apply for a ‘variation’ of its terms to cover instances such as job loss. As your circumstances and ability to pay have reduced considerably, the Trustee may be able to apply for a payment break or reduction in the payment amount.
Unemployment when in a Trust Deed
When the Trustee requests a variation, the reason for your job loss can be an important factor. If it was beyond your control, for example, creditors may be more sympathetic to your situation and agree to the variation for a period of time.
If your only income now is state benefits, the Trustee cannot use this money to pay your Trust Deed, and if your benefits have already been used in this way you may be entitled to a refund.
Could the Trust Deed fail due to unemployment?
Whatever the circumstances that have led to your unemployment, the Trustee should do all they can to ensure the Trust Deed doesn’t fail. Applying for a variation in the Trust Deed is likely to be the first step, and this can give you time to look for a new job or otherwise improve your financial circumstances.
Your finances will be reassessed, and the Trustee will bear in mind the interests of all parties. If creditors don’t agree to changes in the Trust Deed it’s possible that it could fail, leaving you facing legal action and potential sequestration.
Scotland Debt Solutions has been helping Scottish residents to escape debt since 1989. We are debt experts and will guide you on your best options. Please contact one of our expert team to arrange a free same-day meeting – we work from four offices around Scotland.
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