Life after a Trust Deed

June 11, 2015

The end of your Trust Deed will be marked with a formal discharge letter from the Trustee, and your entry on the Register of Insolvencies will be removed. If your property has been earmarked for inclusion within the Trust Deed, you may need to pay a lump sum to fulfil the final terms, however.

Trust Deeds generally come to an end after three or four years. Any remaining unsecured debt included in the agreement will be written off, and your creditors will not be able to pursue you for these amounts.

The end of a Trust Deed usually brings with it a sense of achievement and liberation for debtors. But what can you do in practice to make sure that it does not affect you for any longer than is necessary?

Check your credit file to make sure it is updated

One of the effects of entering formal insolvency is the damage done to your credit rating. The Trust Deed will be marked on your credit file for a total of six years from the starting date, and you need to make sure that the credit reference agencies have notification that your Trust Deed has completed, so that they can mark your file accordingly.

This will happen automatically in most cases, but it is worthwhile checking your credit file with each of the three main agencies regularly – Experian, Equifax and CallCredit. If it has not been updated within three months of the end of your Trust Deed, you are entitled to ask your creditors in writing to make the notification.

Rebuild your credit rating

During the course of your Trust Deed, you would not have been eligible to borrow money, and one of the downsides of entering formal insolvency in this way, is that your credit rating is damaged for some time.

You may be offered some borrowing, but you will notice that the interest rates are much higher than for ‘standard’ loans. There are ways of rebuilding your rating, however, and it pays to be proactive in doing so.

  • Apply for a ‘credit-builder’ credit card: these will also have a higher rate of interest applied, but by paying off your debt in full and on time each month, you will demonstrate financial responsibility, and in time should be able to apply for a credit card with a lower rate.
  • Prepaid cards: you can use these cards to pay for goods and services in the same way as with a credit card. You use your own money to top them up, and most importantly the credit reference agencies are informed that you are paying off the balance regularly.

Save the amount that you would have used to pay your Trust Deed

This is a logical way to start a plan for savings. Having successfully managed your income and outgoings for the term of the Trust Deed, you will be used to living on a reduced amount each month.

This seems like the ideal opportunity to save either part of the amount paid to your Trust Deed, or all of it if possible. This will set you up for a solid financial future, and provide a nest egg that allows you to avoid credit card debt or other types of borrowing.

At Scotland Debt Solutions, we provide professional advice and support to Scottish residents experiencing financial difficulties. If you contact one of our team, we can arrange an initial meeting free-of-charge at various locations throughout Scotland.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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