If you’re worried that the council might take action against you for non-payment of council tax, entering into a Scottish trust deed can be a beneficial step. It stops legal action by all creditors included in the arrangement, and provides a ‘safe haven’ from which to regain control of your finances.
As council tax arrears are regarded as a priority debt, it’s crucial to take action quickly if you feel the situation is becoming unmanageable. Councils have the power to recover payment arrears via earnings or bank arrestment, and can even apply for your sequestration should the level of debt become too high.
So what is a Scottish trust deed, and how can it help you?
A Scottish trust deed is a formal debt procedure that helps people escape from unmanageable debt. Council tax arrears can be included in the trust deed, along with other types of unsecured debt.
An approved money adviser or licensed insolvency practitioner (IP) will assess your financial situation to make sure there are no better options, and then put together a proposal for creditors.
The fact that councils don’t generally add interest and charges to their debt in the same way as some other unsecured creditors, means they’re more likely to agree a sensible proposal for repayment to which you’re legally bound.
Although they’ll receive their money over a longer period of time, they can often recoup more by agreeing a formal debt solution such as this. The fact that professionals have established how much you can sustainably afford to pay can also be a positive influence on their decision.
Your money adviser will calculate an affordable repayment amount after essential living costs have been accounted for, and this sum will be divided between creditors at the agreed ratio once they’ve accepted the proposal.
As long as you keep up this repayment, any debt remaining at the end of the term will be written off, leaving you debt-free. During this time, the creditors included in your trust deed are unable to take legal action to recover their money, so you can focus on improving your financial situation with less pressure.
If the council has been unable to collect their debt for some time, they may decide to pass it on to a debt collection agency. Before the situation escalates to this degree, it would be worthwhile seeking independent advice on your overall financial situation, and find out more about whether the Scottish trust deed might be suitable for you.
The term of a trust deed is generally four years, with one of the major requirements being surplus income with which to pay your creditors. For more information about clearing your council tax arrears with a trust deed, call one of the team at Scotland Debt Solutions for a free consultation. We’ll advise on whether a trust deed is suitable, and make sure you understand all your options.
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